Mutual Life Insurance Co. of New York v. Johnson

Virginia resident Benjamin Cooksey bought a $4,500 life insurance policy with disability benefits from Mutual Life Insurance Company of New York (defendant). The policy provided that if Cooksey was totally and permanently disabled before the age of 60, Mutual Life would pay him a monthly disability benefit and waive premium payments, conditioned on providing proof of total and continuing disability before the policy went into default. Another provision said the policy would be reinstated within six months after a default if there was proof that when the default occurred the insured was totally and continuously disabled. Cooksey paid the quarterly premiums for over a year, then missed a payment, as he was confined to his bed with a chronic debilitating illness. The grace period to pay the premium expired, and the policy went into default. Cooksey was still under the age of 60, but he was so disabled both physically and mentally before the default date that he could not give the notice required to obtain the premium waiver. Cooksey died a month later, and the administrator of his estate (plaintiff) sued to recover the policy benefits. Mutual Life countered that the policy had lapsed because Cooksey did not provide the notice required to excuse the default. The court agreed and directed a verdict for Mutual Life. The Fourth Circuit reversed, and Mutual Life appealed. The Supreme Court granted review.