Opinion
No. 28137
Decided December 31, 1940.
Insurance — Group policy issued on lives of grocery company employees — Protection ceased upon termination of employment — Employer paid premiums after employment terminated — Individual conversion option not exercised by employee or beneficiaries — Employer incurred no legal liability by voluntarily paying premiums — Directed verdict for employer.
APPEAL from the Court of Appeals of Cuyahoga county.
The plaintiffs are the son and daughter of a former employee of the defendant, The Fisher Brothers Company, the owner and operator of a number of retail grocery stores.
During the period of the father's employment the defendant grocery company was the owner of a policy of group insurance issued by The Equitable Life Assurance Society on the lives of the defendant's employees. This contract or policy was voluntarily purchased and held by the defendant, and likewise, the premiums thereon were voluntarily paid by the defendant. A certificate was issued to each employee, but the arrangement involved no expense to him and constituted no part of the terms of his employment. Each employee was permitted to designate his beneficiary or beneficiaries, and the plaintiffs were so named by their father.
When this action was instituted both the grocery company and the insurance company were joined as parties defendant, but the latter was dismissed before the trial.
The plaintiffs' suit is based upon the claim that upon termination of employment the provisions of the group insurance policy and their father's certificate accorded him a right or option to pay the proper premium and have a customary form of life insurance policy issued to him without medical examination if he made application therefor within thirty-one days thereafter; that their father's employment was terminated by the defendant on September 8, 1934; that the defendant thereupon promised him it would continue to pay the premiums itself; that he relied upon this promise; that the defendant paid the premiums for a period of approximately one and one-half years; that on May 16, 1936, the defendant ordered the father's certificate cancelled; that such cancellation was effected two days later; that the defendant failed to notify the father of this action; that the father thereby lost his right or option under the policy and certificate; that the father died approximately four months later; and that the plaintiffs then attempted to collect the insurance but were informed for the first time that their father's certificate had been cancelled.
The provision of the policy upon which the plaintiffs rely reads as follows:
"The society will issue to the employer for delivery to the employee whose life is insured under this policy, an individual certificate setting forth a statement as to the insurance protection to which such employee is entitled under the terms hereof, and to whom it is payable, together with a provision to the effect that in case of the termination of the employment for any reason whatsoever the employee shall be entitled to have issued to him by the society, without further evidence of insurability and upon application made to the society within thirty-one days after such termination and upon the payment of the premium applicable to the class of risk to which he belongs and to the form and amount of the policy at his then attained age, a policy of life insurance in any one of the forms customarily issued by the society, except term insurance, in an amount equal to the amount of his protection under this policy at the time of such termination."
The following similar provision of the father's certificate is likewise relied upon:
"The insurance of any employee shall automatically cease and determine upon termination of employment with the employer in the specified classes of employees; but in case of such termination of employment for any reason whatsoever while insured, the employee shall be entitled to have issued to him by the Equitable without further evidence of insurability upon application made to the Equitable within thirty-one days after such termination and upon the payment of the premium applicable to the class of risk to which he belongs and to the form and amount of the policy at his then attained age, a policy of life insurance, in any one of the forms customarily issued by the Equitable, except term insurance, in an amount equal to the amount of his protection under such group insurance policy at the time of such termination."
At the conclusion of all of the evidence the Court of Common Pleas directed a verdict in favor of the defendant employer.
Upon appeal to the Court of Appeals on questions of law the judgment of the trial court was affirmed.
The case is in this court for review by reason of the allowance of a motion to certify.
Messrs. Harrison Marshman, Mr. M.E. Eckstein and Mr. L.H. Williams, for appellants.
Messrs. Reasner Wieber, and Mr. Harold Fallon, for appellee.
The sole question here presented is whether the trial court was in error in directing a verdict for the defendant under the particular circumstances shown by the evidence adduced in this case.
The plaintiffs contend that the group insurance was not a mere gratuity on the part of the defendant grocery company but was in reality a part of the terms of employment. However, the evidence discloses nothing to indicate that the defendant was not free to discontinue the arrangement at any time.
The plaintiffs concede that, irrespective of whether the insurance was a mere gratuity, the defendant was not obligated to continue to pay the premiums on their father's insurance after termination of his employment, but upon the theory of promissory estoppel they insist that when the defendant thereafter voluntarily assumed and paid the premiums for a period of approximately one and one-half years it thereby imposed upon itself a duty to notify them or their father of any intention to discontinue such payment so that they or he might exercise the option or right conferred by the policy and the certificate.
To this contention the defendant interposes a two-fold defense. First, it is insisted that according to the evidence the employment of the plaintiffs' father was not terminated until May 18, 1936, at which time his insurance concededly was discontinued and no promise made by the defendant. In taking this view of the evidence the defendant properly relies upon the decisive provision of the policy that "upon termination of employment as shown by the employer's records, the insurance upon the life of any employee terminates automatically, unless continued under the individual conversion option."
In the second place, it is insisted that even if the date of termination be considered as September 8, 1934, the defendant nevertheless incurred no legal liability by the mere voluntary payment of premiums subsequently thereto. It is pointed out that neither the policy nor the certificate provides for notice of discontinuation of the insurance. This was known to both the father and the son who is one of the plaintiffs and who was also the defendant's manager in charge of the store where his father was employed. The son likewise well knew that his father was aged, ill and unable to work and that the defendant continued to pay the insurance premiums as a mere kindness rather than as an obligation. Furthermore, the record discloses no evidence that on May 18, 1936, when the insurance was discontinued the father desired or was financially able to exercise his right of conversion or would have designated either of the plaintiffs as a beneficiary under a new policy. The plaintiffs complain bitterly of the defendant's treatment of their father, but although considerable incompetent testimony was permitted to creep into the record, the trial court was clearly correct in holding that there was no evidence warranting submission of the case to the jury.
The judgment of the Court of Appeals must be affirmed.
Judgment affirmed.
WEYGANDT, C.J., ZIMMERMAN, TURNER, WILLIAMS, MATTHIAS and HART, concur.