Bianchi v. Massachusetts Acc. Co., 159 A.D. 931 (N.Y. App. Div. 1913)

A cause of action under a disability insurance policy requiring a period of continuous disability before payment accrues only after the specified period of disability has been completed.

Summary

Bianchi sued Massachusetts Accident Co. to recover under a disability insurance policy for paralysis. The policy provided a lump-sum payment for permanent paralysis that rendered the insured unable to work, contingent upon the paralysis lasting 52 consecutive weeks. Bianchi sued before the 52-week period elapsed. The court held that the action was premature because no claim existed until the 52-week period was complete. The court distinguished this situation from cases where a claim exists but is not yet payable, emphasizing that in this case, the claim itself had not yet come into being when the suit was filed.

Facts

On July 5, 1905, Massachusetts Accident Co. issued a disability policy to Bianchi, insuring him against loss of life, limb, sight, or time. The policy included two relevant clauses: Clause G, which provided a lump-sum payment for permanent paralysis resulting in the loss of use of a hand and foot, contingent on the paralysis lasting 52 consecutive weeks and rendering the insured unable to work. Clause H provided a weekly indemnity for sickness that prevented the insured from working and confined him to the house. On November 12, 1905, Bianchi suffered a stroke causing paralysis. Two days later, Bianchi notified the company. The company canceled the policy and returned the premium. Bianchi filed a proof of loss claiming weekly benefits under Clause H. Bianchi then sued, seeking a lump-sum payment under the paralysis clause (Clause G).

Procedural History

Bianchi initially sought $650 based on 26 weeks of disability under clause H of the policy, but the complaint ultimately set forth a cause of action under clause G, seeking $2,500. The trial court refused the defendant’s request to limit the trial to the claim under clause H. The jury found in favor of Bianchi on all issues, and this was affirmed by the Appellate Division. The Court of Appeals reviewed exceptions related to the timing of the lawsuit under clause G.

Issue(s)

Whether a cause of action accrues under a disability insurance policy that requires a claimant to demonstrate a continuous period of disability (here, 52 weeks) before the claimant has completed the required period of disability.

Holding

No, because the policy language clearly requires the paralysis to exist for 52 consecutive weeks before a claim arises; therefore, the action was prematurely brought.

Court’s Reasoning

The court reasoned that under Clause G of the policy, the 52-week period of paralysis was a condition precedent to any claim arising. Because the lawsuit was initiated before the 52-week period had elapsed, no cause of action existed at the time the suit was filed. The court emphasized, “It is apparent, therefore, that the paralysis resulting in the loss of the usé of a hand and foot must exist for fifty-two consecutive weeks, otherwise there could be no recovery for any amount whatever, and no claim would accrue or exist until the expiration of the fifty-two weeks.” The court distinguished this case from situations where a claim exists but is not yet due, stating, “This case is, therefore, distinguishable from those cases in which a claim exists upon a contract, promissory note, bond, or for goods sold and delivered where the action is brought after the claim existed, but before it became due and payable. In such cases the action would be merely prematurely brought.” Because the claim itself did not exist at the time of filing suit, the general denial in the answer was sufficient to put the existence of the claim in issue. The court found that the trial court erred in not limiting the trial to the claim for weekly allowance under Clause H of the policy. Since the facts related to the Clause H claim were already presented and decided by the jury, the court offered the plaintiff the option to stipulate to a reduced judgment reflecting the amount owed under Clause H, less the returned premium, to avoid a new trial. The court stated: “All of the facts bearing upon this cause of action alleged in the complaint are identical with those embraced in the other claim which was submitted to the jury and passed upon by it. It would seem, therefore, that a new trial is unnecessary unless the plaintiff so elects.”