Opinion
No. 168559.
1946-02-16
HUSTON v. TRAVELERS INS. CO.
Carl Valentine, of Columbus, for plaintiff. Arnold, Wright, Purpus & Harlor, of Columbus, for defendant.
Action to recover life insurance by Melvina Huston against the Travelers Insurance Company. Judgment for defendant.
Affirmed 70 N.E.2d 672.Carl Valentine, of Columbus, for plaintiff. Arnold, Wright, Purpus & Harlor, of Columbus, for defendant.
LEACH, Judge.
This is an action in which the plaintiff, as beneficiary, seeks to recover $2,000 life insurance on the death of her husband, H. M. Huston, who was the holder, as an employee, of a certificate issued by the defendant, under a group life insurance policy, to the Columbus Metal Products, Inc.
By the terms of the master policy issued to the Columbus Metal Products Company, it was provided that: ‘The company will issue to the employer for delivery to each employee whose life is insured hereunder an individual certificate setting forth a statement as to the insurance protection to which he is entitled, to whom payable, and containing provisions to the effect that in case of the termination of employment for any reason whatsoever the employee shall be entitled to have issued to him by the company without further evidence of insurability, and upon application made to the company within thrity-one days after such termination and upon the payment of premium applicable to the class of risks 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 company, except term insurance, with permanent total disability benefit equivalent to that provided hereunder in an amount equal to the amount of employee protection under this policy at the time of the termination of his employment.’
Said master policy further provided:
‘Termination of Insurance-The insurance of any employee covered hereunder shall end when his employment with the employer shall end, except in a case where at the time of such termination the employee shall be wholly disabled and prevented by bodily injury or disease from engaging in any occupation or employment for wages or profit. In such case the insurance will remain in force as to such employee during the continuance of such disability and while this policy shall remain in force until the employer shall notify the company to terminate the insurance as to such employee. Nothing in this paragraph contained shall limit or extend the permanent total disability benefit to which an employee shall become entitled under the policy.
‘Temporary lay-off or leave of absence for reasons other than physical disability as aforesaid shall not be considered as termination of employment for the purpose of this insurance, unless the employer shall so elect.’
Pursuant to the terms of said master policy, the defendant issued certificate No. 10, whereby the life of H. M. Huston was insured for the sum of $2,000 payable to Melvina Huston, his wife, as beneficiary ‘under and subject to the terms and conditions of group life policy of insurance No. G7098 so issued and delivered to the Columbus Metal Products, Inc.’ Said certificate so issued on the life of H. M. Huston contained the following provision: ‘The insurance of any employee covered under said policy shall end when his employment with the employer shall end or prior thereto when the employee shall cease to pay to the employer the required amount to apply toward the premium for this insurance, except in a case where at the time of termination of employment the employee shall be wholly disabled and prevented by bodily injury or disease from engaging in any occupation or employment for wage or profit. In such case the insurance will remain in force as to such employee during the continuance of such disability for the period of three months from the date upon which the employee ceased to work and thereafter during the continuance of such disability and while the group policy shall remain in force until the employer shall notify the company to terminate the insurance as to such employee. Nothing in this paragraph contained shall limit or extend the permanent total disability benefit to which the employee shall become entitled under the policy.’
Said certificate also contained the following: ‘Conversion privilege-Any employee of the employer covered under this group policy shall, in case of the termination of employment for any reason whatsoever, be entitled to have issued to him by the company without further evidence of insurability, and upon application made to the company within thirty-one days after such termination and upon the payment of the premium applicable to the class of risks 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 company, except term insurance, with permanent total disability benefit equivalent to that provided hereunder in an amount equal to the amount of the employee's protection under this policy at the time of the termination of his employment.’
The certificate contained a provision as to permanent total disability benefits, but the same limited such coverage to employees not more than sixty years of age, and as the employee, H. M. Huston, was sixty-seven years of age at the time of his death, said provision is not here involved and no claim is made thereunder in the petition.
The deceased, Harvey Milton Huston, who died of angina pectoris on or about the 21st day of August 1944, when about sixty-seven years of age, became an employee of said Columbus Metal Products, Inc., prior to the issuing of the group policy of insurance and was regularly engaged in the performance of the duties of said employment from that time up until the 14th or 15th day of January, 1944, except during periods when incapacitated by illness. Up until that time he performed his ordinary duties excepting for some short periods of a day or two at a time, and except that he was obliged to remain away from work for five or six weeks just prior to Christmas of 1943, but he resumed work thereafter and worked regularly until and including either the 14th or 15th day of January 1944. After said date he was never able to return to work or do any work of any kind, and actually did no work of any kind. On January 14th or 15th he either laid off from work or was laid off.
On or about the 25th day of January 1945 plaintiff gave defendant proof of said death, but the defendant has refused to pay, claiming that said policy was cancelled under the terms of the insurance contract.
On or about April 3, 1944, the Columbus Metal Products, Inc., mailed to the insurance company a card which purports to be a notice of termination of insurance. Said card is in evidence marked ‘Defendant's Exhibit No. 2’, and is a group insurance record card of H. M. Huston, and contains the following language: ‘Notice of termination of insurance is given by sending this card, with reason and date of termination of insurance filled in, to the Travelers Insurance Co, Group Dept., Hartford, Coun. Reason: L.O.; Date: 4-3-44’. Underneath which appears in parenthesis the following: ‘Write ‘L.C.’ for left company; ‘L.O.’ for laid off; ‘death’ for death; ‘discontinued’ for cessation of payment by employee; and ‘P.T.D.’ for permanent total disability.' The letters ‘L.Q.’ therefore meant ‘laid off’ under this system of record-keeping.
A jury was impaneled and sworn and at the conclusion of the introduction of all of the evidence it was stipulated that the jury be withdrawn and the case submitted to the court.
The evidence, and a preponderance thereof, showed that said H. M. Huston was wholly disabled and prevented by bodily disease from engaging in any occupation or employment for wage or profit throughout the entire period which intervened between the last day he worked for the said Columbus Metal Products, Inc., and the date of his death.
The sole question for determination, therefore, is whether or not the card marked ‘Defendant's Exhibit 2’ effected a termination of the insurance previously existing on the life of said H. M. Huston. If it did, the defendant is entitled to judgment; if it did not, plaintiff is entitled to judgment for the amount prayed for in her petition.
Under the facts it is apparent that the coverage upon the life of H. M. Huston was effective for the period of three months from the date upon which the employee ceased to work, which was January 14th or 15th, and ‘thereafter during the continuance of such disability and while this policy shall remain in force until the employer shall notify the company to terminate the insurance as to such employee’. Notice was given on April 3, 1944, which was prior to the expiration of said three month period. Said notice, moreover, purported to terminate the said insurance on said date, April 3, 1944, which, as stated, was prior to the date of the expiration of the three month period.
The following decisions are noted:
Ralston v. Royal Ins. Co., Ltd., of Liverpool, 79 Wash. 557, 140 P. 552. From the opinion, 140 P. at page 554: ‘It is also claimed that the cancellation notice was void because it fixed the date of cancellation as the 9th, at 12 o'clock which was only four days after the delivery of the notice, and the policy provided that it might be canceled upon five days' notice. Under the clause in the policy, no notice of cancellation could be effective until five days after its delivery. The notice was delivered on the 5th. The fire occurred on the 13th. It thus appears that more than five days had expired between the time of the receipt of the notice and the loss occasioned by the fire. The notice would become effective five days after it had been received, notwithstanding the fact that it specified a shorter period. In Commercial Union Fire Ins. Co. v. King, [108] Ark. [130], 156 S.W. 445, the policy upon which the action was based required a five days' notice of cancellation. The letter of cancellation stated that: ‘We will cancel this policy tomorrow,’ which would be only one day's notice instead of five. It was held that the notice of cancellation became effective five days after its receipt by the assured.'
American Glove Co. v. Pennsylvania Fire Ins. Co., 15 Cal.App. 77, 113 P. 688, 690. From opinion: ‘That the notice fixed April 14th as the date on which the cancellation would become effective, or that the company prematurely entered an attempted ‘cancellation,’ or prematurely notified plaintiff that such ‘cancellation’ had become effective, are wholly immaterial facts. The cancellation was effective on the expiration of the five days after receipt by plaintiff of the notice of April 9th; that is, on April 15th, the notice having been received on the 11th. ‘A mistake in designating the five days does not impair the sufficiency of the notice as a notice of cancellation as of the day when the period expired. Philadelphia Linen Co. v. Manhattan Fire Ins. Co., 8 Pa.Dist.R. 261. So, when seven days notice was provided for, if the notice was received seven days before the loss it was sufficient as a cancellation, though not received seven days before the date fixed therein. Emmott v. Slater Mut. Fire Ins. Co., 7 R.I. 562.’' 3 Cooley's Briefs on the Law of Insurance, 2794.
Hanover Fire Ins. Co. v. Wood, 209 Ala. 380, 96 So. 250, 10th Syl.: ‘A notice that fire policy ‘is hereby canceled’ will be construed as intended to operate according to the terms of the policy at the end of five days, and a complaint that the notice is inoperative because given in praesenti, instead of at the end of five days, is without merit.'
The case of Oldfield v. Chevrolet Motor Co., 198 Iowa 20, 199 N.W. 161, 35 A.L.R. 889, is cited by counsel for plaintiff. Said case is apparently in conflict with the foregoing cases. The first syllabus is as follows: ‘A notice of cancellation of a contract expressly declaring cancellation at a time short of that stipulated in the contract does not operate to work a cancellation at the expiration of the stipulated period.’
A lengthy annotation is appended to the report of said case in A.L.R. beginning at page 893. At page 909 of said annotation it is said that the case of Philadelphia Linen Co. v. Manhattan Fire Ins. Co., referred to supra, stands directly opposed to the Oldfield case. And at page 899, the annotation says under the heading of ‘Insurance Contracts': ‘* * * While there are cases actually, or apparently opposed, the better view is that any notice otherwise sufficient in form, i. e., as to writing, etc., which clearly conveys to the assured notice of cancellation is effective after lapse of the full time stipulated in the policy, whether it be a notice of immediate cancellation of a policy, contemplating cancellation only after notice, or whether the notice given, while not a notice of immediate cancellation, is shorter than that stipulated in the policy. * * *’
Quite a considerable number of cases, including most of those above referred to and many others, are cited in support of the text by the annotater at page 900.
Most if not all of the above cases deal with notices of cancellation required by policy contracts to be given by the insurer to the insured. The notice involved in the Oldfield case was a notice inter partes.
Here, in the case at bar, however, we have a little different situation, that of group insurance, where the group contract existed between the insurance company and an employer, but for the benefit of employees of the employer, and where notice of cancellation as to coverage of a particular employee was to be given, not by the insurance company to the employee or certificate holder, but by the employer to the insurance company.
In the case of Black v. Travelers Insurance Co., 231 Ala. 415, 165 So. 221, 222, the court had before it the same defendant as in the case at bar, and the policy contained substantially the same language as in the instant case, and the notice to cancel was given by the employer there, as here, before the expiration of three months from the termination of the employment, and there, as here, the claimant was wholly disabled by disease from engaging in any occupation or employment for wage or profit. There, as here, it was plaintiff's contention that such notice may not be given until the expiration of three months. Said the court: ‘The rule is well settled in this and other jurisdictions, that, when the notice declares that the cancellation is presently operative, or fixes a time shorter than that prescribed, where the policy requires a certain number of days' notice, it becomes effective at the expiration of the prescribed period. Hanover Fire Ins. Co. v. Wood, 209 Ala. 380, 96 So. 250; 32 Corpus Juris 1249, 1250, § 437, note 18; 35 A.L.R. p. 899 et seq., note. We think that the provision in the policy that its liability may continue for three months, and ‘until the employer shall notify the company to terminate the insurance as to such employee,’ does not mean that the notice may not be given during those three months. The term ‘until’ means, we think, the time fixed by the notice in words or effect to be after the expiration of the three months' period, but no such requirement is properly inferred as to the time when the notice shall be given. Undoubtedly the employer could have terminated the coverage by notice effective immediately upon the expiration of that period. But for practical purposes this could hardly be accomplished by a notice given instantly when the time arrived. We think that the notice could have been given before that time, declaring that it would then be terminated. Under the principle of our Wood Case, supra, and many others cited in the notes to Corpus Juris and A.L.R., supra, the notice would have that operation when it purports to be effective at once, but, under the policy, it cannot be so until the expiration of the three months' term, provided, of course, the right to cancel existed at the time when such term expired.'
It is also noted in said Black v. Travelers Ins. Co. case that on November 16, 1931, when the cancellation notice was given (the three month period having begun to run on October 11, and not expiring until January 11) ‘It did not in terms apply to the date of the expiration of the three months' period nor thereafter, but purported to operate in the present, when its operation could only be effective at a future time, assuming that the employee was disabled and continued so as is contended.’
In this court's opinion the foregoing case is exactly in point and decided the precise question which is before this court in the instant case.
Plaintiff cites and relies on Emerick v. Connecticut General Life Insurance Co., 120 Conn. 60, 179 A. 335, 105 A.L.R. 413. It seems to the court, however, that said case is to be distinguished on its own facts. There the question turned on the meaning of the phrase ‘termination of employment’ as used in the insurance contract there involved, and it was there held that: ‘The coverage of an employees' group insurance policy, which by its terms was to ‘automatically cease with the termination of employment’ is not terminated by dropping from the payroll an employee who has been laid off and notifying the insurer that his insurance is to be cancelled, where no notice of termination of employment was given the employee, who under the terms of a policy had a right (to the exercise of which notice of termination of employment was essential) within thirty-one days after the termination of employment to take out a policy in any of the forms customarily issued by the insurer, without further evidence of insurability.'
In the above case the lay-off was not for physical disability nor did the master policy contain a provision substantially similar to that involved here, which is:
‘The insurance of any employee covered hereunder shall end when his employment with the employer shall end except in a case where at the time of such termination the employee shall be wholly disabled and prevented by bodily injury or disease from engaging in any occupation or employment for wage or profit. In such case the insurance will remain in force as to such employee during the continuance of such disability for the period of three months from the date upon which the employee ceased to work and thereafter during the continuance of such disability and while this policy shall remain in force until the employer shall notify the company to terminate the insurance as to such employee. Nothing in this paragraph contained shall limit or extend the permanent total disability benefit to which an employee shall become entitled under this policy.
‘Temporary law-off or leave of absence for reasons other than physical disability as aforesaid shall not be considered as termination of employment for the purposes of this insurance unless the employer shall so elect.’
Here, by clear implication, if the lay-off was by reason of physical disability, it was, for the purposes of the policy, to be considered as ‘termination of the employment’. In other words, the phrase ‘terminationof employment’ is defined in the policy itself, and the phrase is used in a very different way from its use in the Emerick case.
Moreover, the three month period both by the terms of the master policy and the certificate held by the employee, during which the insurance was to remain in force in case where at the time of the termination of the employment the employee shall be wholly disabled and prevented by bodily injury or disease from engaging in any occupation or employment for wage or profit, was specifically stated to be a period of ‘three months from the date upon which the employee ceased to work’.
The certificate held by the decedent, H. M. Huston, was issued to him, as provided therein (Plaintiff's Ex. A) ‘under and subject to the terms and conditions of a Group Life Policy of Insurance No. G.7098 issued and delivered to Columbus Metal Products, Inc., et al.’, so said certificate holder's rights of conversion were governed not only by the certificate but by the master policy, and so further, his said rights of conversion if dependent on the use of the phrase ‘termination of employment’ would be controlled by the definition of that phrase contained in the master policy, namely, the time he ceased to work, if at the time of lay-off, he was disabled and continued to be disabled.
The case of Emerick v. Connecticut General Life Insurance Co., supra, is therefore, in the court's opinion, not in point. That case was controlled, of course, by the contract of insurance involved in that case, just as the instant case is controlled by the contract here involved; the two contracts are in no wise parallel.
The court, while recognizing that a debatable question is involved, is of opinion that the case of Black v. Travelers Insurance, supra, is well reasoned, and it being the only case precisely in point found which was decided by a court of last resort, this court will follow and adopt such decision.
The finding and judgment will be for defendant for costs.