Gorham v. Pacific Mutual Life Insurance 214 N.C. 526

Stacy, C. J.

It is admitted that the policy in suit was in full force and effect on the date of the death of the insured. Recovery is resisted on two grounds: First, suicide; second, failure to give immediate notice of insured’s death and furnish proof of loss within ninety days thereafter.

First. It was the opinion of the trial court, concurred in by counsel on both sides at the time, that the evidence of violent death, without more, was sufficient to carry the case to the jury on the issue of accidental death or death through accidental means within the meaning of the policy. Parker v. Ins. Co., 188 N. C., 403, 125 S. E., 6; Kinsey v. Ins. Co., 181 N. C., 478, 106 S. E., 136; Wharton v. Ins. Co., 178 N. C., 135, 100 S. E., 266; Thaxton v. Ins. Co., 143 N. C., 33, 55 S. E., 419; Harris v. Ins. Co., 204 N. C., 385, 168 S. E., 208; Mehaffey v. Ins. Co., 205 N. C., 701, 172 S. E., 331; Scott v. Ins. Co., 208 N. C., 160, 179 S. E., 434.

The defendant now urges a different view, citing Hill v. Ins. Co., 150 N. C., 1, 63 S. E., 124; N. Y. Life Ins. Co. v. Gamer, 82 Law Ed., 480; DeIvecchio v. Bowers, 80 Law Ed., 163; Watkins v. Prudential Ins. Co., 315 Pa., 497, 95 A. L. R., 869, and particularly Jefferson Standard L. Ins. Co. v. Clemmer, 79 F. (2d), 724, 103 A. L. R., 171, and note, in support of its present position; distinguishing, Hedgecock v. Ins. Co., 212 N. C., 638, 194 S. E., 86, and Spruill v. Ins. Co., 120 N. C., 141, 27 S. E., 39, as involving life insurance policies rather than accident contracts of insurance; and suggesting that Wharton v. Ins. Co., supra, should be reconsidered as the distinction between life insurance and accident insurance was not then discussed or brought to the attention of the Court in any way. See Cooley’s Briefs on Insurance, Vol. 7 (2nd Ed.), 6022; Moore v. Accident Assurance Corp., 173 N. C., 532, 92 S. E., 362; Rand v. Ins. Co., 206 N. C., 760, 174 S. E., 749.

*531The rule is, that an appeal ex necessitate follows the theory of the trial. Dent v. Mica Co., 212 N. C., 241, 193 S. E., 165; Keith v. Gregg, 210 N. C., 802, 188 S. E., 849; In re Parker, 209 N. C., 693, 184 S. E., 532. Having tried the case upon one theory, the law will not permit the defendant to change its position, or “to swap horses between courts in order to get a better mount in the Supreme Court.” Weil v. Herring, 201 N. C., 6, 175 S. E., 836; Holland v. Dulin, 206 N. C., 211, 173 S. E., 310. “The theory upon which a case is tried must prevail in considering the appeal, and in interpreting a record, and in determining the validity of exceptions” — Brogden, J., in Potts v. Ins. Co., 206 N. C., 257, 174 S. E., 123.

But for the ruling of the trial court in respect of the sufficiency of the evidence to carry the case to the jury on the issue of accidental death or death through accidental means, and the ready acquiescence therein by counsel, the plaintiff might have pursued a different course. Midgett v. Nelson, 212 N. C., 41, 192 S. E., 854; Morgan v. Benefit Society, 167 N. C., 262, 83 S. E., 479. In fact, the ruling of the court in this respect is not challenged by the appeal. The nonsuit, therefore, ought not to be upheld on a ground different from that upon which the judgment was rendered, or on defendant’s volte face between the trial court and the appellate court. Lumber Co. v. Perry, 213 N. C., 533.

Second. We then come to the ground upon which the demurrer to the evidence was sustained. The question is whether the plaintiff has forfeited her rights under the policy by failing to give the defendant “immediate notice” of the death of the insured and furnish proof of loss within ninety days thereafter. The expression “immediate notice,” as used in the policy, we apprehend, was intended to impose upon the plaintiff the exercise of reasonable diligence in giving the stipulated notice, which, under the apparent weight of authority, should be measured by her ability and opportunity to act in the premises. Woodell v. Ins. Co., ante, 496; Ball v. Assurance Corp., 206 N. C., 90, 172 S. E., 878; Mewborn v. Assurance Corp., 198 N. C., 156, 150 S. E., 887; Mutual Life Co. v. Johnson, 293 U. S., 335. Indeed, the fifth paragraph of the policy apparently embodies this idea in the contract. By its terms the requirement of notice is not inflexible. Ball v. Assurance Corp., supra. Nor is the statutory requirement less pliable. C. S., 6479, subsec. 5. Moreover, it should be remembered the provision is one of forfeiture, and not one which affects the nature and desirability of the risk. Mewborn v. Assurance Corp., supra; Rhyne v. Ins. Co., 199 N. C., 419, 154 S. E., 749. See Clifton v. Ins. Co., 168 N. C., 499, 84 S. E., 817. Forfeitures are not favored in the law. Grabbs v. Ins. Co., 125 N. C., 389, 34 S. E., 503; Ins. Co. v. Norton, 96 U. S., 234.

*532There is evidence permitting the inference that plaintiff was not capable of acting in the matter. Rand v. Ins. Co., supra; Nelson v. Ins. Co., 199 N. C., 443, 154 S. E., 752; Rhyne v. Ins. Co., 196 N. C., 717, 147 S. E., 6; Ball v. Assurance Corp., supra; Mewborn v. Assurance Corp., supra. There is evidence to the contrary. Thigpen v. Ins. Co., 204 N. C., 551, 168 S. E., 845; Whiteside v. Assurance Society, 209 N. C., 536, 183 S. E., 754; Peeler v. Casualty Co., 197 N. C., 286, 148 S. E., 261. This makes it a case for the jury under the theory of the trial. Brooks v. Ins. Co., 211 N. C., 274, 189 S. E., 787; Diamond v. Service Stores, ibid., 632, 191 S. E., 358; Moore v. Ins. Co., 193 N. C., 538, 137 S. E., 580. For otherwise to hold as a matter of law that plaintiff’s business activities as shown by defendant’s evidence, destroy any excuse she may have for not acting in the present matter, would be not only to pass upon the contradictory evidence in the case, but also to suggest the validity of these transactions. Wadford v. Gillette, 193 N. C., 413, 137 S. E., 314. Often an insane person is capable of doing many intelligent acts. The rule is, that upon conflicting evidence, or if diverse inferences may reasonably be drawn therefrom, some favorable to the plaintiff and others favorable to the defendant, the case should be submitted to the jury under proper instructions from the court. Lithograph Corp. v. Clark, ante, 400; Hobbs v. Mann, 199 N. C., 532, 155 S. E., 163.

The risks assumed by the defendant have not been increased, nor its rights jeopardized, by the failure of the plaintiff forthwith to give the defendant notice of the death of the insured. No such claim is made; actual notice is admitted. Whether the plaintiff was capable of giving the stipulated notice is in dispute. The record precludes a forfeiture by nonsuit, or as a matter of law, without the voice of the twelve.

On motion to nonsuit, the plaintiff is entitled to the benefit of every fact and inference of fact pertaining to the issues involved, which may reasonably be deduced from the evidence. Cole v. R. R., 211 N. C., 591, 191 S. E., 353; Diamond v. Service Stores, supra.

Third. There is another view of the case which may simplify the questions of notice and proof of loss on the further hearing. For this reason we advert to it now.

It is generally held that “failure to give notice or furnish proofs of loss, or defects in the notice and proofs, are waived by a denial of liability on other grounds,” the reason being that a denial of liability on other grounds is generally regarded as tantamount to saying payment would not have been made had notice been given, or proofs of loss furnished, and the law is not disposed to require a vain thing. Cooley’s Briefs on Ins., Vol. 7 (2d Ed.), 6019; Guy v. Ins. Co., 207 N. C., 278, 176 S. E., 554; Misskelley v. Ins. Co., 205 N. C., 496, 171 S. E., 862; Proffitt v. Ins. Co., 176 N. C., 680, 97 S. E., 635; Mercantile Co. v. Ins. *533 Co., ibid., 545, 97 S. E., 476; Moore v. Accident Assurance Corp., supra; Higson v. Ins. Co., 152 N. C., 206, 67 S. E., 509; Gerringer v. Ins. Co., 133 N. C., 407, 45 S. E., 773; 14 R. C. L., 1349.

“The'preliminary proof of loss or death required by a policy is intended for the security of the insurers in paying the amount insured. If they refuse to pay at all, and base their refusal upon some distinct ground without reference to the want or defect of the preliminary proof, the occasion for it ceases and it will be deemed to be waived. And this can work no prejudice to the insurers, for, in an action on the policy, the plaintiff would be obliged to prove the death of the person whose life was insured, whether the preliminary proofs were exhibited or not”— Mr. Justice Bradley in Knickerbocker Life Ins. Co. v. Pendleton, 112 U. S., 696, 28 L. Ed., 866.

In Omaha Fire Ins. Co. v. Dierks, 43 Neb., 569, it was held that the right of an insurance company to notice of loss is a right which it may waive; and when the insurer denies all liability for the loss and refuses to make payment, and places such denial and refusal upon grounds other than the failure of the insured to give notice of the loss, such denial and refusal avoid the necessity of notice. To like effect are the decisions in Cobb v. Ins. Co., 11 Kan., 93; California Ins. Co. v. Gracey, 15 Col., 70; Phillips v. Protection Ins. Co., 14 Mo., 221; Phoenix Ins. Co. v. Rucker, 92 Ill., 64; Newman v. Ins. Co., 17 Minn., 98.

Still further as illustrative of the principle may be instanced the following :

Illinois case, Ins. Co. v. Cary, 83 Ill., 453: “When an insurance company refuses to pay a loss, placing its refusal upon its nonliability in any event, it cannot insist; in defense of an action, that the preliminary proof was insufficient” — 5th syllabus.

Minnesota case, Ins. Co. v. Taylor, 5 Minn., 393: “Where an insurance company puts its refusal to pay a loss on another ground, it is a waiver of objections to insufficiency in the proofs of loss required by the policy” — 4th syllabus.

The manner in which the Supreme Court of the United States disposed of the question in Tayloe v. Merchants Fire Ins. Co., 50 U. S., 390, gives added force to the rule: “Another objection taken to the recovery is, that the usual preliminary proofs were not furnished, according to the requirement of the seventh article of the conditions annexed to the policies of the company. These are required to be furnished within a reasonable time after the happening of the loss. The fire occurred on the 22d of December, 1844, and the preliminary proofs were not furnished till the 24th of November, 1845. This was, doubtless, too late, and the objection would have been fatal to the right of the complainant, if the production of these proofs were essential to the recovery. But the *534answer is, that the ground upon which the company originally placed their resistance to the payment of the loss, and which is still mainly relied on as fatal to the proceedings, operated as a waiver of the necessity for the production of the preliminary proofs.”

Speaking to the subject in Parker v. Ins. Co., 143 N. C., 339, 55 S. E., 717, Walker, J., delivering the opinion of the Court, said: “The defendant having denied its liability to the plaintiff on the policy by alleging that there was a violation of the iron-safe clause, whereby the policy became null and void, it cannot now successfully plead the failure of the plaintiff to file proofs of loss and defeat his recovery. It cannot blow hot and cold, so to speak, at one and the same time. When it insists that proofs should have been filed, it asserts, of course, the validity of the policy; for why file proofs of loss under a void policy? There can be no loss under such a policy. This defense, therefore, is inconsistent with that of noncompliance with the iron-safe clause, which implies that the policy is invalid. The one necessarily excludes the other, and in the sense that an election must be made between them. This is a most just and reasonable rule, and we have held, in accordance with it, that a denial of liability by a fire insurance company dispenses with the necessity of filing proofs of loss. Gerringer v. Ins. Co., 133 N. C., 407. If the plaintiff had made the required proof, he would have been met with the denial by the defendant of any liability whatever for the loss. It would be unjust to permit the company thus to trifle with a policyholder. We are not speaking of inconsistent pleas, which are allowable, but of defenses which are in substance opposed to each other.”

While the matter was not debated in the trial court and there ruled upon, the plaintiff has insisted on the argument here that the denial of liability on the ground of suicide waives the claim of forfeiture and that the case is one for the jury under the unchallenged ruling that the evidence of violent death, without more, is sufficient to warrant an inference of accidental death, rather than suicide. Hence, it appears that the question of waiver will become an important one on the further hearing. See Misskelley v. Ins. Co., supra; Thaxton v. Ins. Co., supra; Grabbs v. Ins. Co., supra; Jordan v. Ins. Co., 151 N. C., 341, 66 S. E., 206; 14 R. C. L., 1350; Notes, 108 A. L. R., 901; and 22 A. L. R., 424-425.

Nothing was said in Fulton v. Ins. Co., 210 N. C., 394, 186 S. E., 486, or Whiteside v. Assurance Society, 209 N. C., 536, 183 S. E., 754, or Dewease v. Ins. Co., 208 N. C., 732, 182 S. E., 447, or Carter v. Ins. Co., ibid., 665, 182 S. E., 106, which militates against the principle of waiver. The discussion by Schenck, J., in Fulton's case, supra, is fully accordant therewith. Nor is there any turning from the doctrine of waiver in those cases where it is held that the measure of liability is to be determined by the terms, provisions, and limitations of the contract. Whita *535 ker v. Ins. Co., 213 N. C., 376, 196 S. E., 338; McCabe v. Casualty Co., 209 N. C., 577, 183 S. E., 743.

Fourth. It is also in evidence that the defendant had notice of the insured’s death as early as 16 June, 1933, a certified copy of the death certificate having been sent to the home office of the defendant by its claim representative in North Carolina.

The case of Omaha Fire Ins. Co. v. Dierks, 43 Neb., 473, was an action on a fire insurance policy which provided that in case of loss the insured should forthwith give the insurance company written notice thereof. The insured did not himself give such notice, but the insurer soon after the destruction of the insured property by fire received notice in writing thereof from one of its agents residing in the vicinity where the loss occurred, and through whom the insurance was placed, and refused to pay the loss on the ground that the policy at the date of the fire was not in force. It was held that the insurance contract should not be so technically construed as to compel the insured to furnish information to the insurer which it already had. 33 C. J., 8. Contra: Continental Ins. Co. v. Parkes, 142 Ala., 650, 39 S., 204; California Sav. Bank v. Surety Co., 87 Fed., 118.

In Arkansas Burial Society v. Hough, 104 S. W. (2d), 809, where, as here, the defense was based, not upon want of notice, but failure to give notice, it was said that “no one needs notice of what he already knows” for “when a person knows a thing he has ‘notice’ thereof.”

We do not place our decision upon this ground, however, as it is unnecessary to do so. The circumstance is mentioned only to show the attenuateness of the claim of forfeiture and to point out how the matter has been dealt with in other jurisdictions.

It all comes to this: The policy had been carried for twelve years and was in force at the death of the insured. Plaintiff demands payment. Defendant pleads noncoverage and forfeiture. Plaintiff replies by saying that, in her helplessness, neither the contract nor the law required of her an impossible or vain thing, and she craves the privilege of being heard before a jury. The law will not deny her this right.

As the ease is to be tried again, we refrain from discussing the evidence so as not to prejudice either side on the further hearing.

Eeversed.

Barnhill, J., took no part in the consideration or decision of this case.

Devin, J.,

dissenting: I find myself unable to agree with the result reached in the able opinion written for the Court by the Chief Justice, and for the following reasons :

*5361. A careful examination of all the evidence adduced at the trial leads me to the conclusion that there was no other reasonable hypothesis upon which to account for the death of the insured but that it resulted from a wound self-inflicted. The clear provision of the policy is that: “This insurance does not cover suicide.” To my mind it is a manifest case of suicide, which the courts and everybody else should face, notwithstanding technical rules of legal procedure. However, I have no quarrel j^ith the principle of law followed by the Court and sustained by the authorities, that since the insurance is against “death by accidental means,” proof of violent death creates the inference of death by accident. This was the view held by the court below.

2. The statute of North Carolina (0. S., 6479), prescribing standard form of policy for accident insurance, authorized the insertion of the following provisions, which appeared in the policy in suit: “Written notice of injury on which claim may be based must be given to the company within twenty days. ... In the event of accidental death immediate notice thereof must be given to the company.” It was also written in the policy: “Failure to comply with any of the provisions of this policy shall render invalid any claim under this policy.”

It is uncontroverted that the insured died 8 March, 1933; that on 5 September, 1934, eighteen months later, a letter from an attorney was written the company. In this letter the company was advised of the death of the insured and request made for blanks to make formal application for the insurance benefits. On 25 February, 1935, this suit was instituted. The fact that an agent of the company, in June, 1933, a.dvised the company of the death of insured by suicide, and the receipt by it of a copy of the death certificate showing death by suicide, could not be regarded as notice of claim by the beneficiary under the policy.

The plaintiff’s contention that her failure to give notice is attributable to her total incapacity, through no fault of her own, under the rule laid down in Rhyne v. Ins. Co., 196 N. C., 717, 147 S. E., 6, in my opinion is not borne out by the evidence.

The evidence is uncontradicted that she qualified with reasonable promptness as co-executor of her husband’s estate, and in March, 1933, she made claim under six life insurance policies (unaffected by suicide), which were paid. She was admitted to the State Hospital 18 May, 1933, under a diagnosis of “drug addictional psychosis,” meaning her condition was due to over indulgence of drugs, and not to a mental illness. (Testimony of the superintendent of State Hospital, Dr. Ashby.) On 17 August, 1933, she was paroled and left that institution. At that time “her mental condition was good.” Said Dr. Ashby: “In my opinion she was competent to transact ordinary business affairs.” Thereafter she transacted business, consulted lawyers, executed deeds, traveled to *537New York, and performed many other intelligent acts before attempting to comply with the requirements of the policy to give “immediate notice” of claim, so that the facts might be promptly investigated.

Over against this we have the testimony of plaintiff’s daughter, “I thought she was insane.” Dr. Speight said: “Her mental and physical condition was not such as to enable her to read a contract of several pages of insurance policy and to comprehend and know what was required of her by the contract of the policy.” Who could ? This is a far cry from the rule laid down in Rhyne v. Ins. Co., supra.

The judge of the Superior Court, Judge Parker, who tried this case with care and reasoned judgment, and heard all the evidence at first hand, made a written statement of his reasons for granting the motion for judgment of nonsuit, and filed it at the time with the court. This statement is printed in the appellee’s brief with the consent of the appellant. I quote this statement as follows: “Now in this case the first notification that the defendant had from the beneficiary that she contended that it was an accidental killing, is a letter from Mr. Yalentine on 5 September, 1934, that is, lacking a few days being 18 months after the body of Dr. Gorham was found. She says the reason she did not give immediate notice was due to disability and she relies upon the Rhyne and Nelson cases. The Court says this, that if the beneficiary is prevented by a total incapacity to act in the matter, resulting from no fault of his own, that performance within a reasonable time by the assured after regaining his senses or by his representative after discovering the policy, would suffice. The Rhyne case, 196th Eeport, is the first case that went to our Supreme Court involving that principle of law. In that case Ehyne was insane. He was insane when the suit was brought. In the Nelson case, following the Rhyne case, Mr. Nelson was suffering from softening of the brain. Of course that was through no fault of their own, insanity and softening of the brain. In this case, the evidence is undisputed that Mrs. Gorham was suffering from no mental diseases. She was addicted to drugs and certainly the taking of drugs is a voluntary act. Dr. Ashby testified she had no trace of insanity. Not a single witness of hers has sworn she was insane. In addition to that, she has presented a number of witnesses who testified that in their opinion Mrs. Gorham was of noncapacity, but the evidence is uncontradicted that Mrs. Gorham, in the fall of 1933, signed several deeds; in 1934, she signed several deeds; she consulted Mr. F. S. Spruill in respect to this particular policy; she consulted Mr. W. S. Wilkinson in respect to accident insurance; she had the body of her husband exhumed and, of course, the purpose of that was this litigation; she carried that body to Duke University, entered into a contract with the doctor she selected to perform a post mortem, that he should not divulge *538wbat be found; sbe bas part of tbe skull taken off; sbe bad tbe bullet taken out, carried it to New York and to "Washington; it is put in tbe People’s Bank in Rocky Mount where I believe they now say part of Dr. Gorham’s skull is. Our court bas said in tbe face of facts of that kind tbe statement of a witness that tbe person was of noncapacity, is a mere assertion or expression of opinion which bas no probative value, which shows that tbe witness is mistaken, that bis opinion is utterly erroneous and does not carry tbe issue to tbe jury. In my opinion in this case, tbe fact that sbe consulted Mr. Spruill, tbe fact that sbe consulted Mr. Wilkinson, and executed those deeds, tbe fact that sbe bad tbe body of her husband exhumed, tbe fact that sbe attempts to bind the doctor by contract not to divulge wbat be found, tbe fact that sbe carried part of tbe skull and tbe bullet to cities in tbe north, show that tbe opinion of tbe witnesses who said sbe was of noncapacity is a mere assertion or expression of opinion and that she bas fatally failed to give immediate notice to this company of loss.”

I do not understand tbe majority opinion to bold as a matter of law that denial of liability by tbe defendant in its answer on tbe ground of failure to comply with tbe terms of tbe policy with respect to giving tbe notice of claim, as well as on tbe ground of suicide, would dispense with tbe'necessity of giving tbe notice, required by tbe contract of insurance against accident, and constitute a waiver on tbe part of tbe defendant. To do so would render nugatory tbe provisions contained in tbe policy with respect thereto, by which tbe parties have agreed to be bound, and which provisions are inserted in tbe policy by tbe sanction of tbe statute, and would seem to be in conflict with tbe decisions of this Court in Dewease v. Ins. Co., 208 N. C., 732, 182 S. E., 447; Whiteside v. Assurance Society, 209 N. C., 536, 183 S. E., 754; Fulton v. Ins. Co., 210 N. C., 394, 186 S. E., 486.

Tbe distinction between these cases and those cited in tbe opinion appears in tbe language quoted in Misskelley v. Ins. Co., 205 N. C., 496 (at page 505), 171 S. E., 862: “Tbe provision in tbe insurance policy requiring proof of total disability to be furnished within a certain definite time is waived by tbe company denying liability within such time upon other grounds than failure to furnish proof of total disability.” Ins. Co. v. Lewis, 183 Pac. Rep. (Okla.), 975.

Here tbe denial was contained in an answer filed (as appears from tbe record) more than two years after tbe time for giving “immediate notice” of claim under tbe terms of tbe policy bad elapsed.