PETERS, J. pro tern. — Plaintiff, the insured in a policy of life insurance issued by defendant company, brought this action for specific performance to compel the company to exchange the policy for another of his choice, claiming such right by virtue of an “Exchange of Policy” clause appearing in his policy. From a judgment denying the relief prayed for, plaintiff prosecutes this appeal.
On June 18, 1927, upon receipt of the required premium, the respondent insurance company delivered to appellant a $10,000 ordinary life nonparticipating policy of insurance. Thereafter, appellant performed all conditions required of him under the policy, and, at the commencement of this action, such policjr was in full force and effect. During 1937, 1938 and 1939, appellant, purporting to act under the “Exchange of Policy” clause contained in such policy, demanded that respondent exchange the ordinary life policy for another life policy identical with the issued policy except that the demanded policy had attached a rider or supplemental contract providing for disability benefits at the rate of $10 per month for each $1,000 of life insurance provided in the life policy.
The “Exchange of Policy” clause contained in the original policy reads as follows: “At any time while in full force, provided the Insured is then less than sixty years of age, this policy may be changed without medical examination for a policy of the same amount upon any form issued by the Company at the time this policy takes effect and which provides for a higher rate of premium. Such change will be made upon written application therefor on the forms required by the Company and upon payment of a sum equal to the difference between the premium on the new policy and the premium paid on this policy, with interest at the rate of [3]five and one-half percent per annum from the due date of each payment to the date when the change is made. The new policy shall take effect as of the date of this policy and shall he based upon the same age of the Insured as this policy. ’ ’
The evidence shows, and the trial court found, that appellant, while the policy was in full force and effect, and while appellant was under sixty years of age, made demand, accompanied by a tender of the proper amount, for a life policy with disability benefits. The court also found that in 1927, when the original life policy was issued, the company had available for issuance at least twelve other forms of life insurance policies, each providing for a premium in excess of that provided for in the issued policy, and, at that time, also had available seven different forms of riders or supplemental contracts which did not constitute separate policies themselves but which could be attached to life policies to provide for additional insurance, such as double indemnity and various forms of disability benefits; that each of such supplemental contracts, or riders, provided for a premium for the benefits therein specified which was separate from, and in addition to, the premium charged for the life insurance provided in the several forms of policies to which such supplemental contracts or riders might be attached.
The trial court’s conclusion that appellant was not entitled to exchange his original policy for the one demanded was predicated on two separate theories. In the first place, the trial court concluded that, reasonably construed, the “Exchange of Policy” clause did not permit the exchange of an ordinary life policy for an ordinary life policy with disability benefits. The second theory was predicated upon estoppel. In its answer the respondent pleaded, and the trial court found, that in 1927 appellant, by formal application, applied for an ordinary life policy plus disability and double indemnity benefits, and tendered the premium required for siich a policy; that respondent refused to issue the policy with those additional benefits attached, but issued the policy here sought to be exchanged and paid back to appellant the portion of the premium chargeable to the additional benefits that had been deposited by appellant upon making his application ; that appellant accepted the limited policy and refund with knowledge that the company refused to issue a life policy with disability benefits.
[4]If it be assumed that these findings are supported by the evidence, which is challenged by appellant, we agree with appellant that such findings would not constitute a defense to this action. If the “Exchange of Policy” clause permits the exchange of an ordinary life policy for one with disability benefits attached, the mere fact that respondent had refused to issue such a policy when the ordinary life policy was issued, in the absence of fraud or misrepresentation, which is not claimed, would not bar appellant from exercising an express right given to him by the terms of his policy.
While we agree with appellant that the findings predicated on the special defense do not support the judgment, nevertheless we are of the opinion that the judgment must be affirmed, for the reason that the “Exchange of Policy” clause, properly interpreted, does not permit the type of exchange here demanded. That clause permits the issued policy to be exchanged upon conditions set forth for another of “the same amount,” without further medical examination. The only reasonable interpretation of the clause is that the insured is permitted to exchange his issued life policy for any other form of life policy issued by the company — not that he may exchange it for other types of policies issued by the company. Such clause permits a substitution of policies only where the risk involved is identical with the risk assumed in the first policy. This is made clear by the provision that no further medical examination is required and by the limitation that the new policy must be for the “same amount” as the original policy. The evidence shows without contradiction that the medical examination required by the company for a life policy with disability benefits is different and stricter than that required for the issuance of a life policy. In the instant case the original policy provides for $10,000 life insurance. The policy demanded is for $10,000 life insurance plus disability benefits of $10 per month for each $1,000 of insurance set forth in the life policy. The demanded policy, therefore, is not in the “same amount” as the original policy. The risk assumed in the original policy is entirely different from that involved in the demanded policy. According to the original policy the company agreed to pay $10,000 to a designated beneficiary upon the death of the insured. By the demanded policy appellant requested that the company assume that risk, plus the risk of paying to him $100 a month during all periods that he became disabled. The risk [5]assumed in a liability policy is entirely different from that assumed in a life policy and is predicated upon entirely different factors. Disability insurance is classified by the law as different from life insurance. (§ 100, Ins. Code; see, also, §§ 101 and 106 of the Ins. Code.)
While it is true that all clauses in insurance policies must be interpreted most strongly against the company, and all ambiguities must be resolved in favor of the insured (see cases collected 14 Cal. Jur., p. 443, § 24), where the meaning of the clause is clear, and the intent of the parties obvious, that salutary rule cannot operate to change the nature of the contract and to cast upon the insurance company a liability obviously not assumed. (See cases collected 14 Cal. Jur., p. 446, footnotes 7 and 8; 7 Cal. Jur. Supp., p. 86; 7 Cal. Jur. (Pocket Supp.) p. 35.) The rule of construction under discussion does not require the court to give the policy a strained and unnatural construction. (Perkins v. Fireman’s Fund Indem. Co., 44 Cal.App.2d 427 [112 P.2d 670].) The policy, like any other contract, must be interpreted according to the intention of the parties as expressed in the instrument. (Blackburn v. Home Life Ins. Co., 19 Cal.2d 226 [120 P.2d 31].)
The interpretation of the clause urged by appellant would lead to absurd and obviously unintended results. It would mean that an insured, knowing that the physical examination required for a life policy'was different and less strict than that required for a policy with disability benefits, could secure the issuance of a strip life policy, and then, immediately, without further medical examination, demand and secure the issuance of a life policy with disability benefits. It would also mean that all persons who have life policies containing such a clause, if they became disabled before attaining the age of sixty, could, upon the conditions set forth in the clause, secure disability insurance, and thus secure a life income after the disability had been incurred. To give the clause such a construction would compel the company to incur a risk never intended or assumed.
The case of Rosenberg v. Equitable Life Assur. Soc., 193 N.C. 126 [136 S.E. 364] interprets a somewhat similar clause contrary to the construction contained in this opinion, and in accordance with the contentions of appellant. That opinion fails to discuss the various arguments set forth in this opinion which we think are conclusive. Certainly, it cannot [6]be contended that any reasonable man would believe that under the clause in question he was entitled to exchange his life policy for one containing a disability clause when that very policy when the life policy was issued had been refused him, or when, conceivably, the disability had already been incurred. The reasoning of the cited case, in our opinion, is unsound.
The judgment is affirmed.
Gibson, C. J., Shenk, J., Curtis, J., Edmonds, J., and Traynor, J., concurred.