Summary
In Magee, the Mississippi Supreme Court, without any reference to the identical predecessor statute then in effect, upheld the denial of group life insurance coverage to a railroad employee after the Railroad notified the insurer that the employee had "ceased to be employed as from the 31st day of October, 1934, and the assurance of said employee is accordingly cancelled."
Summary of this case from Dearman v. Prudential Ins. Co. of AmericaOpinion
No. 33103.
May 9, 1938. Suggestion of error overruled June 6, 1938.
1. INSURANCE.
Where group policy procured by employer did not provide for notice to an employee of intention of insurer to cancel employee's insurance certificate when notified by employer that employment had ceased, employee was not entitled to notice.
2. INSURANCE.
Where insurer was obliged to accept premiums when, but not unless, tendered by employer, which had procured group policy and had right to cancel insurance covering any employee when notified by employer so to do, whether employee had tendered to employer premium on employee's certificate was immaterial on question whether employee's certificate had been cancelled.
3. INSURANCE.
Even if insurer issuing group life policy to employer covering employees and insurer issuing accident policy to same employer acted jointly and with a common purpose, so that amount due disabled employee on accident policy should have been applied to payment of premium on other policy, the insurer issuing life policy had right to cancel the employee's insurance when notified by employer so to do, under policy, which provided that insurance should cease when notice was given to insurer by employer that employment had terminated.
4. APPEAL AND ERROR.
The refusal of chancellor to permit bill to be amended after chancellor had taken case under advisement for decision in vacation, could not be reversed, where, had the amendment been allowed, it would not have justified a decree different from the one rendered.
APPEAL from the chancery court of Lincoln county; HON. V.J. STRICKER, Chancellor.
F.D. Hewitt, of McComb, for appellant.
Each group policy is to be interpreted according to its own terms with a liberal construction, and the rules of construction should be applied liberally, since the wage earners and persons secured thereby do not have the opportunity to know the contents of the contract between the insurance company and the employer.
There is only one condition on which this policy could have been forfeited, and that is, had Henry W. Magee "ceased employment" his policy would be void unless the insurer accepted the premium from the employer knowing this to be true. It may be true that Henry W. Magee's estate could be held to the railroad company, employer, for the amount of the unpaid premiums, but they cannot avoid this man's policy as long as he remained in the employment of the railroad company.
Murray v. Metropolitan Life Ins. Co., 110 So. 660.
One of the rights given, at the termination of an employee's employment, for any reason, whatsoever, was to have issued to him, upon application made to the company within 31 days, an individual policy of insurance; that this was a benefit of very real value, because he would be entitled to receive the policy even though at the termination of his employment, his physical condition was such that he could not otherwise obtain insurance. The courts have held that if the employer could terminate the status of employee, who was at the time temporarily laid off or absent on leave simply by notifying the company that it had done so without notice to the employee, knowledge on his part of the termination of employment would be necessary.
Emerick v. Conn. Life Ins. Co., 105 A.L.R. 413.
There is nothing in the contract that requires the employee to pay the Sun Life Assurance Company, whatsoever, and there is no liability upon the part of the employee for the premium payment. It is also held that the acceptance of a premium through an inadvertence and without knowledge that the insured employee had ceased his employment, so as to be no longer eligible for the insurance has been held not to keep the insurance in force.
Proof, however, that the employer collected the employee's premium for the month in which loss occurred established a prima facie case of coverage, placing the burden on the insurance company to show that the employment had terminated, thus cancelling the insurance as to such employee.
Joiner v. Metropolitan, 40 Ga. App. 740; Aetna Life Ins. Co. v. Castle, 259 Ky. 722, 835 S.W.2d 465.
On the question as to whose agent the employer is the decisions are not uniform and are in conflict regarding the status of the employer in collecting and forwarding the premiums to the insurance company. Some of the courts hold that the employer is the agent of the employee, but it has been stated that where the employer collects the premium from the employee and remits it to the insurer, that the better rule seems to be that the employer is the agent of the insurer, particularly in collecting and forwarding the premium.
All States Life Ins. Co. v. Tillman, 226 Ala. 245, 146 So. 393; Grossman v. London Guarantee Acc. Co., 144 Misc. 520; Payton v. Metropolitan Life Ins. Co., 148 So. 721; Payton v. Morgan L. L.R. S.S. Co., 148 So. 724; Section 5196, Code of 1930.
In this case if employment never ceased the defendant is bound to pay under this policy. All of the parties, the Sun Life, Zurich, the Railroad Company, and the insured, Henry W. Magee, were bound according to the master policy and the certificate issued to insured. The facts are undisputed. When a disputed question of fact about the employee having ceased and severed his employment relationship with employer, that question is one for the jury. Where the facts are undisputed, as in this case, is one of law.
Henry W. Magee had been practically continuously employed, according to the testimony of the master mechanic, J.N. Chapman, since 1918. At different times in his service record he was suspended, but when he returned to work on April 14, 1934, these two certificates were issued to him upon one application, which certificates were written up and numbered, signed and returned by the Sun Life from its office in Montreal, Canada. It is undisputed that he became ill with a permanent and total disability on July 30, 1934, and remained so until the time of his death January 5, 1936.
Public, No. 162, 75 Congress, Chapter 382, 1st Session, H.R. 7519; Aetna Life Ins. Co. v. Castle, 252 Ky.
The Supreme Court of Mississippi has stated time and again that the law abhors a forfeiture and will adopt the theory that will uphold the insurance.
The facts are undisputed that no notice was given by the railroad company, employer, to the insurance company, insurer, to Henry W. Magee, insured, or his beneficiary Mrs. Magee, that his insurance was cancelled.
This group policy like a great many group policies contains what is known or is designated as a conversion privilege under which upon cessation of employment the employee is entitled to have issued to him upon application within 31 days an individual policy of life insurance in the amount of his insurance under the group contract. This was in Mr. Magee's policy and he could have exercised this privilege without medical examination, and it is reasonable to believe that he would have done so had he been notified by the I.C.R.R. Co., or the Sun Life Assurance Company that his employment had ceased, as this was the only insurance that he had or could possibly get.
There are two lines of decisions on this question, one holds that it is not necessary to give notice, and the other, which is the most enlightened, reasonable and preferable, especially in view of the fact that the employee has no way of knowing anything about the provisions of the master policy, that he must be notified in some way.
The decisions hold that where a man is discharged or suspended and his relationship definitely fixed by a definite termination of his employment, that this is notice sufficient, and he does not have to have further notice before cancellation. That he is advised of all his rights and privileges at that time, but in this Magee case he always maintained the status of an employee.
Prudential Ins. Co. v. Furgerson, 180 S.E. 503; Emerick v. Conn. General Ins. Co., 120 Conn. 60.
Can it be said that every time an employee gets sick and ceases to be actively employed and remains off for several months, would he lose a valuable right because he got permission of his employer to remain at home sick. This would be a foolish construction of this policy. A man with no other insurance, with a large family, anxious to keep his insurance up, at home sick with a fatal disease, had no notice from the Sun Life, the Zurich or the railroad company, and to have a clerk in the Group Insurance Bureau at Chicago, without any authority from the employing officers, to give notice that his policy was cancelled would be tantamount to robbery.
When this suit was filed the appellant had no way of getting any information from the I.C.R.R. Company or the insurance companies, and it was alleged in the bill of complaint that Magee left the service of the railroad company on July 30, 1934, when the proof showed that he was granted a leave of absence for one year and then the leave of absence was extended for six months. A timely motion was made for permission to amend the bill of complaint so as to conform to the proof in this case, which was denied, the court saying that it was not necessary as he had decided the case on another question.
Sec. 567, Code of 1930.
We have only to state timely request was made for this amendment in order to show that the court was in error in not permitting it to be done.
Brady, Brady Phillips, of Brookhaven, Clinton H. McKay and Lucius E. Burch, Jr., both of Memphis, Tenn., and E.C. Craig and John W. Freels, both of Chicago, Ill., for appellees.
The general rules of construction to which other forms of insurance are subject, are applicable to the group contract.
Crawford on Group Insurance, sec. 16, page 37.
If an insurance contract is perfectly plain and unambiguous, it should be construed as written.
Continental Casualty Co. v. Hall, 118 Miss. 871, 80 So. 335; The Protective Life Assurance Co. v. Hale, 230 Ala. 323, 161 So. 248; Equitable Life Assur. Society v. Adams, 259 Ky. 726, 83 S.W.2d 461; Missouri State Life Ins. Co. v. Sargeant, 49 Ohio App. 545, 197 N.E. 397; 14 R.C.L. 931; 55 A.L.R. 1246; Boseman v. Connecticut General Life Ins. Co., 301 U.S. 196, 81 L.Ed. 1036, 110 A.L.R. 732.
Under the insurance contract, Magee's insurance could be canceled upon his ceasing to make the required contributions even if he had not left the service of the employer.
Boseman v. Connecticut General Life Ins. Co., 301 U.S. 196, 81 L.Ed. 1036, 110 A.L.R. 732; Equitable Life Assurance Society v. Austin, 255 Ky. 23, 72 S.W.2d 716; All States Life Ins. Co. v. Tillman, 226 Ala. 245, 146 So. 393; Pool v. Protective Life Ins. Co., 26 Ala. App. 161, 155 So. 631; Austin v. Metropolitan Life Ins. Co., 142 So. 337; Steffen v. Equitable Life Assur. Society, 64 S.W.2d 302; Aetna Life Ins. Co. v. Castle, 252 Ky. 228, 67 S.W.2d 17; Murray v. Metropolitan Life Ins. Co., 145 Miss. 266, 110 So. 660.
Magee's group insurance could be cancelled without notice to him from the employer or the insurance company.
Neither the group insurance policies nor the certificates issued thereunder required that the insurance companies or the railroad company notify Magee when his insurance was canceled. In the absence of such a provision in the contract, according to the great weight of authority, neither the insurance companies nor the railroad company was under the duty to notify him.
Magee v. Equitable Life Assur. Society, 244 N.W. 518, 85 A.L.R. 1457; Beecey v. Travelers Ins. Co., 267 Mass. 135, 166 N.E. 571; Colter v. Travelers Ins. Co., 270 Mass. 424, 170 N.E. 407; Aetna Life Ins. Co. v. Lembright, 166 N.E. 586; Thull v. Equitable Life Assur. Soc., 40 Ohio App. 486, 178 N.E. 850; Davis v. Metropolitan Life Ins. Co., 161 Tenn. 655, 32 S.W.2d 1034; Stoner v. Equitable Life Assur. Soc., 28 Dauph. Co. Rep. 235 (Pa.); Powalski v. Aetna Life Ins. Co., 165 N.E. 476, 63 A.L.R. 1030; American Nat. Ins. Co. v. Jackson, 12 Tenn. App. 305; 55 A.L.R. 1253; 85 A.L.R. 1462, 1470, 1471; 105 A.L.R., 430, 431, 433; Roehrig v. Missouri State L. Ins. Co., 251 Ill. App. 434; Chrosniak v. Metropolitan L. Ins. Co., 121 Misc. 543, 201 N.Y.S. 211, 209 App. Div. 846, 204 N.Y.S. 898.
The railroad company was not the agent of the insurance companies.
Crawford on Group Insurance, sec. 25, page 55; Connecticut General Life Ins. Co. v. Speer, 48 S.W.2d 553; Insurance Co. v. Jackson, 12 Tenn. App. 305; Equitable Life Assur. Soc. of the U.S. v. Hall, 253 Ky. 450, 69 S.W.2d 977; Davis v. Metropolitan Ins. Co., 161 Tenn. 661; 55 A.L.R. 1247; 85 A.L.R. 1463; Boseman v. Connecticut General Life Ins. Co., 301 U.S. 196, 81 L.Ed. 1036, 110 A.L.R. 732; Duval v. Metropolitan Life Ins. Co., 82 N.H. 543, 136 A. 400, 50 A.L.R. 1276; People ex rel. Kirkman v. Van Amringe, 266 N.Y. 277, 194 N.E. 754; Leach v. Metropolitan L. Ins. Co., 124 Kan. 584, 261 P. 603; Equitable Life Assur. Soc. v. Hall, 253 Ky. 450, 69 S.W.2d 977; Dewease v. Travelers Ins. Co., 208 N.C. 732, 182 S.E. 447.
The Zurich General Accident and Liability Insurance Company, Limited, paid all of Magee's disability claims in full and withheld no amount which should have or could have been applied so as to keep his life insurance, with the Sun Life Assurance Company of Canada, in force.
There was no tender of the required contribution by or for Magee in November, 1934.
The lower court properly overruled appellant's motion for leave to amend her bill of complaint.
The proposed amendments were not material and would not have changed the result of the case.
Magee v. Equitable Life Assur. Soc., 244 N.W. 518, 85 A.L.R. 1457; Griffith's Chancery Practice, sec. 391, page 399.
The application for leave to amend was not promptly made, but was the result of an inexcusable want of diligence.
Walker v. Brown, 45 Miss. 616; Duggan v. Chaplin, 75 Miss. 441; Griffith's Chancery Practice, sec. 392, pages 401-402.
If the proposed amendments were material and would have changed the result of the case, they could not have been made without substantially affecting in an injurious manner that which was or had become a real right of the appellees.
Griffith's Chancery Practice, sec. 393, pages 402-403.
The appellees tried, argued and briefed this cause upon the theory and supposition that the pleadings correctly stated the issue.
Griffith's Chancery Practice, sec. 396, pages 407-409.
We respectfully submit that the learned Chancellor was eminently correct in overruling appellant's motion for leave to amend her bill of complaint and deciding the case upon the issue as originally presented, tried, argued and briefed.
Argued orally by F.D. Hewitt for appellant and by R.P. Phillips and T. Brady, Jr., for appellee.
The Illinois Central Railroad Company carries with the Sun Life Assurance Company, hereinafter called the assurance company, a policy insuring the lives of its employees, and on application therefor the assurance company issues to such an employee a certificate setting forth that his life is covered by the policy and designating the beneficiary thereof. The premiums due under this policy on the lives of its employees are paid monthly in advance to the assurance company by the railroad company. It collects the major portion of the premium on the life of an employee from the employee, paying a small portion of it itself. In April, 1934, Henry W. Magee, a then employee of the railroad company, obtained such a certificate from the assurance company designating his wife, Georgia Nettles Magee, as the beneficiary therein; the amount of his insurance being $2,000. In January, 1936, Magee died, and thereafter his widow called on the assurance company to pay her the $2,000, and on its refusal so to do exhibited an original bill of complaint in the court below against the assurance company and the Zurich General Accident Liability Insurance Company for the collection of the $2,000. The alleged relation of the Zurich Company hereto will hereinafter appear. The case was tried on bill, answer, and proof, resulting in a decree dismissing the bill of complaint.
Section VI of the policy, headed "Termination of Assurance," is in part as follows: "Other provisions notwithstanding, the assurance on each employee covered hereunder shall, while this policy remains in force, continue until written notice shall have been given to the Company by the Employer on the form supplied by the Company for that purpose, to the effect that said employee is no longer in the service of the Employer, whereupon such assurance shall by that fact alone, cease, except as otherwise provided under the terms of Provision VII." Paragraph VII has no bearing hereon.
The bill of complaint alleges that in July, 1934, Magee became totally disabled and left the service of the Illinois Central Railroad Company. According to the appellant's evidence, however, what happened was that Magee was given a leave of absence by the railroad company, and during August, September, and October he paid the railroad company the monthly premiums due by him under the policy. Evidence was also introduced that he tendered the premium for November to an agent for the railroad company, who refused to accept it. The court below found that this tender was not established, and the correctness of this ruling is challenged, but it will not be necessary for us to decide it.
In December, 1934, a duly authorized agent of the railroad company notified the assurance company on a form provided for that purpose that Magee "has ceased to be employed as from the 31st day of October, 1934, and the assurance of said employee is accordingly cancelled." On receipt of this notice the assurance company cancelled Magee's insurance under section VI of the policy, hereinbefore set forth. This action of the railroad company and of the assurance company effectually canceled Magee's insurance under the policy, unless one of the following contentions of the appellant prevented it from so doing. These contentions are: (1) No notice was given Magee by either the railroad company or the assurance company of the intention of either to cancel his insurance; (2) that Magee, within the time therefor, tendered to the railroad company the premium on his insurance for the month of November, but the railroad company declined to receive it, and thereby relieved him of the necessity of making any further effort to pay that or future premiums; and (3) the Zurich General Accident Liability Insurance Company had in its hands $24 due by it to Magee, out of which it was its duty to pay the assurance company premiums due on Magee's insurance, which payment the assurance company was under duty to accept. The basis of this contention will hereinafter appear.
1. The policy does not provide for notice to an employee of the intention of the assurance company to cancel his insurance when notified by the railroad company that he had ceased to be employed by it, consequently under the terms of the policy which he accepted by coming under its provisions Magee was not entitled to such notice and cannot complain that it was not given him.
2. Whether Magee tendered the railroad company the premium on his insurance for November, 1934, or not, is of no consequence. The assurance company did not look to him for the payment of the premium, but to the railroad company, between whom no relation of principal and agent exists, and the assurance company was obligated to accept premiums when, but not unless, tendered it by the railroad company, and had the right to cancel the insurance when notified by the railroad company so to do.
3. The railroad company carries with the Zurich General Accident Liability Insurance Company a disability insurance for the benefit of its employees who accept it and pay the railroad company the premiums to be paid by it thereon; it does not require its employees to accept the benefit of either this or the assurance company's policy, but will not permit them to accept one without the other. Magee became permanently disabled in July, 1934, and the Zurich Company acknowledged liability to him therefor but paid him, according to the appellant's claim, $24 less than was due him at the time of his death. The bill of complaint alleges that these two insurance companies "acted together and with a common understanding and purpose in writing the insurance . . . and are severally and jointly liable in issuing and delivering the certificate sued on in this case; . . . acted as one, and the same company in writing said insurance, . . . with a common purpose, understanding and agreement . . . and for all intents and purposes it was one and the same contract (the two insurance policies) paid for by the same premium collected at the same time by the Illinois Central Railroad Company." From which the appellant says that the $24 due him by the Zurich Company should have been applied by it to the payment of premiums on his insurance with the assurance company. The evidence does not sustain this allegation of the bill of complaint, but if it did, it follows from what we have hereinbefore said as to the method provided for the cancellation of the policy that the assurance company had the right, and probably was under obligation to the railroad company, to cancel Magee's insurance when notified by the railroad company so to do.
One other question remains. After hearing the evidence introduced on the trial of this case, the chancellor took it under advisement for decision in vacation. While the chancellor was considering the case, the appellant filed a motion requesting that she be allowed to amend her bill of complaint by eliminating therefrom the allegation that Magee left the service of the Illinois Central Railroad Company in July, 1934, and allege in lieu thereof that he was then granted a leave of absence by the company. This motion was overruled. Several reasons appear why we cannot reverse the chancellor for so doing, one of which is that under what we have hereinbefore said, had the amendment been allowed it would not have justified a different decree from the one rendered.
Affirmed.