Mutual Benefit Health & Accident Ass'n v. Kennedy

WALLER, Circuit Judge. Appellant issued an accident policy to the husband of appellee. Insured accidentally drowned in Mobile Bay in the State of Alabama. His widow, the beneficiary, brought suit. The facts were stipulated. Both parties moved for summary judgment and the motion of the plaintiff was granted by the court below. Defendant appealed. The policy contained the following pertinent provisions: “Strict compliance on the part of the insured and beneficiary with all the provisions and agreements of this policy, and the application signed by the insured, is a condition precedent to recovery and any failure in this respect shall forfeit to the Association all right to any indemnity.” “If default be made in the payment of the agreed premium for this policy, the subsequent acceptance of a premium by the Association or by any of its duly authorized agents shall reinstate the policy, but only to cover accidental injury thereafter sustained and such sickness as may begin more than ten days after the date of such acceptance.” (Emphasis added.) “The term of this policy begins at 12 o’clock, noon, standard time, on date of delivery to and acceptance by the Insured against accident and on the thirty-first day thereafter against disease and ends at 12 o’clock noon on date any renewal is due.” “* * * and the payment in advance, and acceptance by the Association, of premiums of Fifteen ($15.00) Dollars Quarterly thereafter, beginning with Feb. 1, 1939, is required to keep this policy in continuous effect.” The last premium receipt, dated June 1, 1940, provided: “Payment of this premium receipted for, if made on or before the date to which premiums have already been paid, keeps your policy in continuous effect, and if made after that date, reinstates the policy on the date of this receipt, as provided in the policy, until 12 o’clock noon, standard time, September 1, 1940, at which time another premium will be due.” (Emphasis added.) Under the plain provisions of the policy and insured’s last premium receipt, insured’s protection was for the definite term, to-wit, from 12 o’clock, noon, June 1, 1940, until 12 o’clock, noon, September 1, 1940. If the premium were not paid by 12 o’clock, noon, September 1, 1940, the policy would not be kept “in continuous force”. If the premium were paid and accepted after 12 o’clock, noon, September 1, 1940, the policy would be reinstated. The coverage of the policy, therefore, was for a definite and fixed term with no grace period allowed. It was not an unconditionally continuing contract.1 The insured drowned at 2 o’clock P. M., September 1, 1940. The premium due at 12 o’clock on that day not only had not been paid but no showing whatsoever is made that any effort or attempt to pay the premium was made before the accident or thereafter. It is contended that since the premium became due on Sunday, and since the next day was Labor Day, a legal holiday in Florida, the insured had until Tuesday, the 3rd of September, in which to pay the premium. The contract was issued at Miami, insured was a resident of Florida when the policy was issued, and the premiums were required to be paid at Miami in Florida. The rights of the parties will, therefore, be governed by the laws of Florida. Plaintiff contends that since section 7649, C.G.L. of Florida 1927, F.S.A. § 855.01, makes it a misdemeanor for any person to follow any “pursuit, business or trade on Sunday, either by manual labor or with animal or mechanical power, except the same be work of necessity” and in view [26] of the provision of section 7651, C.G.L., F.S.A. § 855.03, making it a misdemeanor for a person to employ “his apprentice or servant in labor or other business on Sunday, except it be in the ordinary household business of daily necessity, or other work of necessity or charity”, that the premium was payable on the next secular or business day. The Supreme Court of Florida in Hooks v. State, 58 Fla. 57, 50 So. 586,2 and Greenblatt v. McCall & Co., 67 Fla. 165, 64 So. 748, held that contracts executed on Sunday were not void. The Negotiable Instrument Statutes of Florida provide that if a negotiable instrument should fall due on Sunday it may be paid on the next succeeding secular day (Secs. 6760 and 6847, C.G.L., F.S.A. §§ 674.01, 675.03), but the case here does not involve a negotiable instrument and such statutes are not applicable. It is urged that principles of the common law and common business practices, apart from statute, permit one to do an act on the following business day when the last day upon which it is required to have been done falls on Sunday. We may assume, but not decide, that this is the law, and the plaintiff’s case would still fall, because there is no showing whatsoever of any effort, intent, or purpose on the part of the insured to exercise the privilege of paying the premium either on Sunday or later. We do not have a case where an effort was made to pay the premium, nor where the premium had been transmitted but received late. The policy by its express term expired at 12 o’clock noon. We are not here concerned with the provisions of the policy relating to sick benefits because the term of the policy as to sickness is different from the term of the policy as to accident, and the insured had no claim under the sick benefit provisions of the policy; but some confusion arises out of the use of the words “renewal” and “reinstatement”. The premium receipts in evidence use the words “renewal or reinstatement” in reference to acceptance of checks which are dishonored. Paragraph (c) under the Additional Provisions of the Policy provides that the term of the policy “ends at 12 o’clock noon on the date any renewal is due”. Six premium receipts are put in evidence. The last receipt is dated June 1, 1940, and provides that the payment of premium, if made before the date to which premiums have already been paid, keeps the policy in continuous force, but if made after that date, reinstates the policy until an hour and date fixed in the receipt. But it appears that two of the premiums receipts offered in evidence bear a date later than the first day of the month on which the quarterly premium became due. For instance, the receipt for the premium due March 1, 1940, was received and countersigned March 6, 1940. The premium due December' 1, 1939, was received and the receipt counter-signed December 7, 1939. From these two receipts it is argued that since the company accepted the premium on March 6, 1940, and since the premiums were payable quarterly, the next premium would fall due on June 6, 1940, instead of June 1, 1940, and that the quarterly period, therefore, should run from March 6 to June 6 and from June 6 to September 6, and that since the insured was drowned on September 1, and since the quarterly premium would not be due until September 6, he died while the policy was in force. The words “renewal” and “reinstatement” are not synonyomus. The insured had the right to an automatic renewal and continuation of his policy provided he paid the premium on or before the date due “as provided in the policy”. But if he failed to pay the premium on the date due as [27] provided in the policy, then the following provision of the policy would govern: “If default be made in the payment of the agreed premium for this policy, the subsequent acceptance of a premium by the Association or by any of its duly authorized agents shall reinstate the policy, but only to cover accidental injury thereafter sustained * * (Emphasis added.) It is argued that the payment of the premium on March 6, 1940, was a reinstatement and a new contract because the insurer had the option to accept or not to accept the payment of premium. It may be conceded that a reinstatement under the terms of the policy is a new contract “but it results in putting the old contract back into force with its premium rates and premium dates and its general provisions unchanged”. Lanier v. New York Life Insurance Company, 5 Cir., 88 F.2d 196 (text 199).3 See also Ætna Life Insurance Company v. Dunken, 266 U.S. 389, 45 S.Ct. 129, 69 L.Ed. 342. It is apparent from the wording of the policy and from the treatment accorded the premium receipts of December 7, 1939, and March 6, 1940, that the company and the insured treated these two late premium payments as reinstatements which placed the policy back in force, with its premium rates and premiums dates and general provisions unchanged, and thus the policy was kept in continuous force from the date of issuance until 12 o’clock, noon, September 1, 1940. According to the evidence in the record, the premiums were paid on or before the time due and thus the policy was automatically renewed from quarter to quarter, with the exception of the two reinstatements above mentioned, and these reinstatements, even if considered as new contracts, put the policy back into force without any change therein except that a reinstatement would not have the effect of covering an accident occurring between the date the premium was due and the date of the reinstatement, but would only cover accidents subsequently occurring. The purpose of this provision was to prevent an insured from letting his policy lapse and then, after he had had an accident or an illness, to secure a reinstatement and recovery for an accident occurring at a time when the policy was not in force. The court cannot make a new contract. It cannot ignore the fact that this was a term policy that expired at a definite hour unless renewed and kept in continuous force by the payment of a premium before that hour, nor can the court in this instance adopt the reasoning in those cases where an effort was made by a party to make a required payment but was prevented from doing so because of the fact that the bank or the place of business of the payee was closed. Even if the insured had the privilege of paying on the next day, it surely would be necessary to show that he attempted, or at least intended, to exercise that privilege. The motion of the plaintiff for a summary judgment should have been denied, but the motion of the defendant for a summary judgment should have been granted. The case is reversed for further proceedings not inconsistent with the views herein expressed. Reversed. Footnotes [1] A controlling case is Prescott v. Mutual Benefit Health & Accident Association, 133 Fla. 510, 183 So. 311, 314, 119 A.L.R. 525, wherein the Supreme Court of Florida construed an identical policy of Appellant and said: “So it is clear that the policy was not an unconditionally continuing contract, but was a contract for a stated term renewable for additional stated terms on conditions named in the policy. One of the conditions precedent to the renewal for a subsequent stated term was the payment in advance and acceptance by the insurer of the required $12.00 quarterly premium. v * ❖ * » “It appears to us there is no ambiguity in the contract under consideration. “There being no ambiguity, the language of the contract must be held to control. People’s Savings Bank & Trust Co. v. Landstreet, 80 Fla. 853, 87 So. 227.” [2] Construing See. 7649, C.6.L., the Supreme Court of Florida in Hooks v. State, supra, said: “This being a penal statute, of course, the same must be strictly construed. What pursuit, business, or trade does it inhibit the following or performance of on Sunday? Clearly such as requires manual labor or animal or mechanical power to perform it. The execution of a note, mortgage, or other contract requires neither manual labor nor any animal or mechanical power, and we do not think that their execution on Sunday is prohibited by this statute, and that, consequently, the validity of any contract made in this state is not affected by the fact that it was executed or delivered on Sunday. The purpose of our statute, when all of its provisions are considered, seems to be to prohibit the performance on Sunday only of those works or pursuits that from their nature have to be performed in public, and that may, therefore, be offensive to the sensibilities of the Christian community in which they are carried on, if followed on the Lord’s Day.” [3] Cited and followed in Winer v. New York Life Insurance Company, 138 Fla. 818, 190 So. 894, and Franklin Life Insurance Company v. Parish, 5 Cir., 109 F.2d 276.