The opinion of the court was delivered by: DAWSON
This action is brought by the Mutual Life Insurance Company of New York (hereinafter referred to as Mutual) to reform a policy issued to Herman Simon in 1944. Reformation is sought on the ground that as a result of a scrivener's error the policy recites $ 57,098.26 instead of $ 5,798.26 as the 'Single Sum' payable when the insured becomes 65 years old and his rights to the endowment annuity mature.
There is no dispute as to the material facts. On December 7, 1944, Herman Simon, residing in Los Angeles, California, submitted an insurance application to Mutual through a local agent in Los Angeles. The application recites the coverage sought as '5,000 endowment annuity at age 65.' Pursuant to this application a policy dated December 13, 1944 was issued. The terms of coverage appear on the first page and read as reproduced below:
'The Mutual Life Insurance Company of New York Will Pay
The Insured ............... Herman Simon ............... at the end of the endowment period, which is the policy anniversary nearest the Insured's 65th birthday, a
Life Income of .......... Thirty Three and 34/100 ....... Dollars each month, with ten years certain, or, if elected on or before the end of the endowment period, a
Single Sum of ..... Fifty Seven Thousand Ninety Eight and 26/100 ..... Dollars or will pay the beneficiary upon receipt at the Home Office of the Company in the City of New York of due proof that the Insured died before the end of the endowment period, the
Face Amount of .......... Five Thousand One ............. Dollars or the cash value at the Insured's death, if such case value, exclusive of dividends, is greater than the face amount. Payment is subject in any case to the exceptions under the provisions on page 5 regarding war, aviation, and suicide, and to the other provisions of this Policy.'
After the recitation of coverage, the premium section appears. By its terms a premium of $ 100.05 was payable every December and June. At the bottom of the page appears a legend in red type: 'Read Your Policy Carefully.' On page four, under the heading 'Miscellaneous Provisions' appears the following term of the policy:
'The Contract -- This Policy has been issued in consideration of the application and of the payment of the premiums provided for on page 1. This Policy and the application, copy of which is attached, constitute the entire contract.'
The scrivener's error asserted by Mutual consists of the number spelled out in the policy opposite the printed phrase 'Single Sum.' As the policy now reads, the insured upon reaching 65 can elect to receive either $ 57,098.26 in cash or a ten year certain annuity of $ 33.34 a month. The disparity between these choices is easy to appreciate. The annuity aggregates just $ 400 a year, while the principal of $ 57,000 at 3% yields $ 1,700 a year. Thus the 'Single Sum,' Mutual contends, should read $ 5,798.26 instead of $ 57,098.26. The insertion of the latter figure is explained as a typographical error committed when the policy was typed. The testimony offered at trial established that Simon's application for a $ 5,000 endowment annuity was approved when received by Mutual in New York. A clerk in the policy department then compiled a data sheet, Plaintiff's Exhibit 1, indicating the coverage and premium. As it appears on the data sheet, the Single Sum is $ 5,798.26. The evidence establishes that it is the correct sum for the indicated premium.
As a matter of routine, the completed data sheet was dispatched to the typing department. There the information on the data sheet was typed into the appropriate blanks on a policy form. The form was then submitted to a checker who compares the policy with the data sheet. Apparently the error was made in the typing department and not detected by the policy checker. The typist appeared at the trial and admitted that the error was made by her. Thereafter the policy was delivered to the insured in California. There is no evidence that anyone detected the error before 1952. This is so even though changes were made in 1948 through the agency in Jacksonville, Florida, which at these times had temporary custody of the policy. Two riders evidencing these changes were attached to the policy. One, dated April 27, 1948, is headed 'Automatic Premium Loan'; the other, dated March 9, 1948, is titled 'Designation of Beneficiary, Settlement Options, and Rights.' Neither rider refers to the principal amount claimable under the endowment annuity. In April 1952 Mutual's agent in Jacksonville detected the discrepancy in the amounts appearing on the face of the policy. He notified the home office which investigated and concluded that an error had been made. The insured was approached but refused to consent to a modification of his policy.
On the basis of the testimony and exhibits introduced at trial the Court makes the following findings of fact:
(1) A scrivener's error was committed in the typing of the policy in that the figure $ 57,098.26 was inserted before the words 'Single Sum.' The amount which should have been inserted in this space is $ 5,798.26.
(2) The scrivener's error constituted a mutual mistake in that neither party when the contract was made intended or knew that the policy called for the payment of a 'Single Sum' of $ 57,098.26. Both parties intended that this amount be about $ 5,798.26.
(3) The scrivener's error was not prejudicial to the insured in that prior to its discovery he did not change his position or rely upon the mistaken figure in the belief that it was correct.
The insured does not dispute that the face amount payable should read $ 5,798.26, the sum asserted by Mutual. Nevertheless, in opposition to this action for reformation there are raised four defenses: (1) the error resulted from the unilateral negligence of Mutual; (2) Mutual is guilty of laches in failing to detect the error within eight years; (3) the policy as issued was a counter offer by Mutual which the insured ...