184 Ky. 155
Court of Appeals of Kentucky.
STANDARD ACCIDENT INS. CO. v. SMITH.
March 14, 1919.
ACTION: Reversed.


Appeal from Circuit Court, Knox County.
Action by Lula B. Smith against the Standard Accident Insurance Company to recover on an accident policy for the death of the insured, Harold B. Smith.
Judgment for plaintiff, and defendant appeals.

QUIN, J.
The appellant issued to Harold B. Smith, April 20, 1916, an accident policy in the sum of $1,000, in consideration of a premium of $30, payable $5 per month from wages earned in the months of May to October, 1916, inclusive. Appellee gave to the company an assignment of his wages with his employer, the Louisville & Nashville Railroad Company, to secure the payment of same. In the order of assignment, which is made a part of the policy, it is provided that the first of the payments shall apply to the first insurance period of two months from the date of the policy, and the subsequent payments for a like period of time. This order of assignment contains this further provision: "I hereby agree that failure to deduct any of the above premium payments from any cause is at my risk, and, if any premium payments be not deducted as above provided for, all my rights and the rights of my beneficiary under said policy shall be void at the termination of the last insurance period for which payment has been actually deducted from my wages, except in case of failure to deduct the first payment, in which event the insurance shall cease at the termination of the month from the wages of which the first deduction should have been made. I hereby waive for myself and my beneficiary under said policy notice of nonpayment of any premium, and agree that no claim will be made for injuries sustained, nor for sickness commencing, during any period for which its respective premium has not been actually paid in full, except that in case of a just claim for injuries sustained or sickness commencing before the end of the month from the wages of which the first premium is to be deducted. If I have left the employment of the employer above named without having earned in the month specified sufficient wages to pay said first premium, or have collected or disposed of wages earned in said month, so as not to leave enough to pay said first premium, then policy shall be void from its date. Upon the payment of any claim thereunder, any premium then due and unpaid, or covered by any written pay order, may be deducted therefrom. I hereby agree that I will not revoke or annul this order or assignment by notice to said railway company or otherwise."

Similar provisions are found in another portion of the policy. Under an agreed state of facts, filed in the record, it appears that the insured quit the Louisville & Nashville Railroad Company on May 4, 1916, without having paid that portion of the premium which was to have been taken from his wages earned in May, 1916. Insured came to his death during the night of May 4th, between dark of that day and daylight on the morning of May 5th. He quit work about 6 p. m. May 4th, giving as his reason for quitting the employment of the Louisville & Nashville that "he had a better job."

Under the employment of said insured with the railroad company, the wages earned by him in the month of May were not due and payable until the 27th or 28th of the month; but the insured had given to the Y. M. C. A. of Louisville an order or assignment for all the money due him from the railroad company for services under his employment with it, which order or assignment was accepted and paid by the railroad company to the extent of his earnings, to wit, $4.53. This order was given and accepted before the insured quit the employment of the railroad company.

This case was tried upon said agreed statement of facts, a jury being waived. The court rendered judgment in favor of the appellee, who is the mother of the insured and beneficiary under said policy, in the sum of $970, being $1,000 less $30, the amount of the premium called for in the order.

It is contended by the appellant: First, that the insured did not come to his death through external, violent, or accidental means; second, the policy was not in force at the time of the death of the insured.

The conclusion we have reached as to the second proposition makes it unnecessary to consider the first. It will be seen, from the provisions of the policy and of the order of assignment, insured agreed that

(a) if he left the employment of the company without having earned in the month specified sufficient wages to pay said first premium; or

(b) if he collected or disposed of his wages earned in said month, so as not to leave enough to pay said premium, then the policy should be void from its date; and furthermore he agreed

(c) that he would not revoke, cancel, or annul the order of assignment by notice to his employer or otherwise.

From the statement of facts it is manifest the insured violated the provisions of the policy in each of the three foregoing respects. At the time of his death he had not earned sufficient wages to pay the first monthly premium; he had collected all wages earned by him to May 4th, when he quit; and he had, by an assignment to the Y. M. C. A., withdrawn the wages earned and thus violated the last provision above noted, in that he, by his act, annulled the order of assignment to his employer.

Thus the court held that the clause referred to in the preceding quotation was binding, and but for said clause the company could have been compelled to pay under the policy, even though he left the service of the company.

We are mindful of the general rule, in construing contracts of insurance, that the presumptions favor the insured, because the company makes the contract, and in cases of doubtful provisions or phrases doubts should be resolved in favor of the insured.

The purpose of an insured in taking a policy of insurance is to secure indemnity, and this should not be defeated if a fair or liberal construction will permit a recovery. When the provisions of a policy are susceptible of two interpretations, that which will sustain, will be adopted in preference to one that will defeat, recovery. Applying that rule of construction to this case, we think the language used is so plain that a construction thereof could not be had to justify a recovery on the part of the appellee under the facts disclosed by the record. The order of assignment bears the signature of the insured; he agreed to the terms as therein stated, and the company had a right to rely upon this agreement. The assignment was taken, as suggested in the Bane Case, supra, to secure the payment of the premium. Many railroad employes are nomadic in nature, and except for the security the companies have under these orders of assignment they could ill afford to issue policies providing for the payment of premiums in easy or periodical gales or installments. This character of insurance has been adopted especially to meet the needs and suit the convenience of railroad employes, and under provisions, such as we find in the policy in question, it is possible for the employe to carry accident insurance, and but for such plan of payment many employes would be unable to thus protect themselves and their families.

Giving to the contract in question a fair, reasonable, and liberal construction, we are of the opinion that, when the insured quit the services of the Louisville & Nashville Railroad company, before he had earned as much as $5, and withdrew, through another assignment, the amount he had earned, he violated the provisions of said policy in each of the particulars herein above referred to, and, this being true, this voided the policy, and the beneficiary was not entitled to any recovery thereunder.

Wherefore the judgment of the lower court is reversed for further proceedings consistent with this opinion.

Ky.App. 1919.
STANDARD ACCIDENT INS. CO. v. SMITH.
209 S.W. 848, 184 Ky. 155


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