Summary
In Protective Life, Lamarque, the insured, had no contractual relationship with the insurance company, but was a third-party beneficiary of the contract which was between Alabama Power Company and the insurance company.
Summary of this case from English v. Insurance Company of North AmericaOpinion
No. 32803.
November 22, 1937. Suggestion of Error Overruled January 3, 1938.
1. INSURANCE.
Where proof showed that corporation whose subsidiary employed insured applied for group insurance in Alabama, and that policy which stipulated that insurer was to perform its obligation in Alabama was delivered to corporation at its office in such state, policy was an Alabama contract and interpretation placed upon it by either party was to be determined by the laws of that state.
2. INSURANCE.
Under group policy requiring insured employee to furnish insurer with due proof that he was, before having attained the age of 60, wholly disabled by bodily injury to be entitled to disability payments, which was an Alabama contract and governed by Alabama laws, furnishing proof of disability and approval thereof by insurer while insured was a member with premiums paid and insurance was in force was a condition precedent to insurer's liability for disability payments.
3. INSURANCE.
Where group policy which was an Alabama contract and governed by Alabama law required insured employee to furnish due proof of disability by bodily injury before attaining the age of 60 to obtain disability payments, insured who did not furnish proof as to his disability to insurer until after the expiration of more than 60 days from the time he ceased to be an employee of the insured employer and at a time when under the contract he was no longer insured could not recover.
4. CONSTITUTIONAL LAW. Insurance.
Group policy which was performable and was delivered in Alabama was governed by Alabama laws, notwithstanding that insured employee was a resident of Mississippi, had never been in Alabama, and insured employer operated its busses only in Mississippi, and notwithstanding statute requiring court to solve interpretation of contract of insurance according to the laws of Mississippi, since a contrary construction would result in the denial of due process (Code 1930, sections 2294, 5131; Const. U.S. Amend. 14).
APPEAL from the circuit court of Harrison county. HON.W.A. WHITE, Judge.
Leathers, Wallace Greaves, of Gulfport, for appellant.
The introduction in evidence, over the objection of the appellant, of the individual certificate and group policy of insurance was error which was highly prejudicial to the rights of this appellant, the appellee's cause of action itself being founded upon the group policy of insurance.
McGifford v. Protective Life Ins. Co., 151 So. 349; McBride v. Conn. Gen. Life Ins. Co., 14 F. Supp. 240.
The lower court erred in refusing to grant to the appellant the peremptory instruction requested at the close of all of the testimony in the case.
On the principle of comity, a court in this state will generally enforce a contract made in another state, applying thereto the laws of the state where the contract was made. Every element essential to the making of the contract of insurance involved in this case had its origin and was completed in the state of Alabama; this policy of insurance contained every element necessary to make it an Alabama contract. The individual certificate of insurance is not a part of the contract of, or necessary to, the insurance; nor would it affect any of the terms of the policy, but served merely as evidence of the insurance of the appellee, whose rights and the appellant's liability would have been the same if the policy had not provided for the issuance of the certificate; and certainly the fact that the appellee finally came into possession of the certificate has no bearing on the question whether the Alabama law or the Mississippi law governs in respect to the furnishing of proof of the appellee's disability.
Boseman v. Connecticut General Life Ins. Co., 84 F.2d 701, 57 Sup. Ct. Rep. 686; Hartford Acc. Ind. Co. v. Delta Pine Land Co., 292 U.S. 143, 78 L.Ed. 1178; McBride v. Connecticut Gen. Life Ins. Co., 14 F. Supp. 240; Mutual Benefit H. A. Assn. v. Baldridge, 70 F.2d 236; Mutual Life Ins. Co. v. Hill, 193 U.S. 551, 24 S.Ct. 538, 48 L.Ed. 788.
It will probably be contended by the appellee that sections 5131 and 2294 of the Mississippi Code of 1930, make the insurance contract a Mississippi contract, and solvable and enforceable under the Mississippi law. This contention was embodied in the appellee's replication in this case, and, we believe, was argued in the lower court, in the very face of the holding of the United States Supreme Court in the case of Hartford Accident Indemnity Co. v. Delta Pine Land Co., 292 U.S. 143, 78 L.Ed. 1178, a case involving several of the questions at issue in this cause, and a case decided by this Honorable Court adversely to the contentions of the Hartford Accident Indemnity Company. The United States Supreme Court, in reversing this Honorable Court, held that the Mississippi statutes above referred to deprive the appellants in this case of due process of law.
It is a well known rule, enforced by our court, and all others, that it is the duty and function of the court to construe and enforce a contract as it is written, and not to attempt to make a new contract for the parties, nor, by implication or construction, to add to the contract words, terms or conditions, exceptions, promises, or obligations which it does not contain; and just as familiar is the rule that, if a contract of insurance, in its terms, is plain, certain and free from ambiguity, there is no room for construction and it is the duty of the court to enforce it as written.
Berry v. Lamar Life Ins. Co., 142 So. 445, 165 Miss. 405; New York Life Ins. Co. v. Alexander, 122 Miss. 813, 85 So. 93; McGifford v. Protective Life Ins. Co., 151 So. 349.
This court has held in a number of cases that parties to insurance contracts have the right to make stipulations amounting to conditions precedent to liability in assuming obligations in contractual matters, and this is true with section 2294 of the Mississippi Code of 1930, still in force and effect.
Berry v. Lamar Life Ins. Co., 165 Miss. 405; McGifford v. Protective Life Ins. Co., 151 So. 349.
The policy of insurance here sued on being an Alabama contract, we call the court's attention to the two leading cases in Alabama on the principal question involved, the cases of McGifford v. Protective Life Ins. Co., 151 So. 349, and McCutcheon v. All State Life Ins. Co., 158 So. 729.
This court is committed to the universal principal that conditions precedent in the law of contracts, if the conditions are not impossible within themselves, are binding, although by some later event the performance of the condition might become impossible without any fault whatsoever on the part of the promisor.
2 Williston on Contracts, pages 1549 and 1550.
The decisions of the McGifford and McCutcheon cases have been followed by numerous courts, but we see no reason for citing in this brief more than the following cases:
New England Mutual Life Ins. Co. v. Reynolds, 217 Ala. 307, 116 So. 151, 59 A.L.R. 1075; Bergholm v. Peoria Life Ins. Co., 284 U.S. 489, 52 S.Ct. 230, 76 L. Ed. 416; Egan v. New York Life Ins. Co., 60 F.2d 268; Kingsland v. Missouri State Life Ins. Co., 66 S.W.2d 959.
Hewes Goodman, of Biloxi, for appellee.
In Murray v. Metropolitan Life Insurance Company, 145 Miss. 266, 110 So. 660, a case directly in point with the case at bar, this court stated that "the provisions of the master policy and those of the individual certificate of insurance should be construed together." Therefore, it was proper for the group policy and certificate to be allowed in evidence.
The appellee proved every averment of his declaration and certainly the trial court properly refused to grant a peremptory instruction to the appellant.
Appellant was, prior to the year 1925, and continuously thereafter, authorized to do business in the State of Mississippi, and certainly cannot complain that this court has not the right to construe a policy of insurance covering employees employed in Mississippi with a Mississippi concern.
Section 5131 of the Mississippi 1930 Code states in part as follows: "All contracts of insurance on property, lives or interests in this state shall be deemed to be made therein." Appellee pleaded this section and Section 2294 of the Mississippi 1930 Code, and therefore it is appellee's contention that Section 2294 Mississippi 1930 Code is binding upon the appellant, especially inasmuch as the contract of insurance sued on herein did not state any specified time in which due proof must be filed.
The appellee contends that the termination of his employment and the resulting termination of the insurance only relieved the appellant from liability for injuries and resulting disabilities that might occur after the discontinuance of the insurance, and that it did not discharge any liability to the appellee that had become fixed during his employment and the continuance of the insurance; there is no provision in the contract of insurance which requires the claim and proof of permanent disability to be made before the termination of his employment; and that since appellee's disease and resulting total and permanent disability occurred while he was employed and while the policy was in full force and effect, the liability of the appellant had become fixed and may be enforced in accordance with the terms and provisions of the policy. This is the law in the State of Mississippi and is the proper and fair construction of the policy as stated by this court in Murray v. Metropolitan Life Ins. Co., 145 Miss. 266.
In Taber v. Royal Ins. Co., 124 Ala. 681, 26 So. 252, a case involving the question of whether the benefits under a policy of insurance had been forfeited by the insured for failure to file notice and proof of loss within the time specified in the policy, the Alabama court said: "The omission to give such notice was not by the policy an express term of forfeiture, and without that, the law would be slow to apply any strictness of construction to work a forfeiture, in the absence of any allegation or possibility of damage. We hold that the notice was sufficient in terms and time. . . . Provisions of this kind, to be effective as forfeitures, must be expressed as such in unmistakable terms in the contract itself."
This Honorable Court in the case of Aetna Life Ins. Co. v. Roberts, 174 Miss. 278, 164 So. 311, divided cases for total and permanent disability benefits under insurance contracts into two classes, to-wit: In one class the cases of the type of Berry v. Lamar Life Ins. Co., supra, and New York Life Ins. Co. v. Alexander, supra, which by the terms of the contract of insurance, made the filing of due proof a condition precedent to the right of recovery. In the other class this court enumerated such cases as Standard Accident Life Ins. Co. v. Broome, 111 Miss. 409, 71 So. 653, and National Ins. Co. v. Mitchell, 162 Miss. 197, 138 So. 808, and American National Ins. Co. v. Waters, 133 Miss. 28, 96 So. 739, in which latter class this court said that liability under the contract of insurance did not depend upon the time of filing of proof, but upon the happening of the disability.
It is the universal rule of law pertaining to contracts that the intention of the parties contracting is the governing factor in construing a contract.
The purpose for which the Alabama Power Company originally took out the insurance was to insure its employees and the employees of its associated companies, against total permanent disability while in the employ of the company. The filing of due proof is merely a condition subsequent that can be done within a reasonable time. Nowhere in the policy in the instant case is there any forfeiture clause, nor is there any specific time in which due proof must be filed.
5 R.C.L., page 973, sec. 55; 32 C.J., page 976.
It is a universal rule of law that contracts of insurance are to be construed strictly against the insurer, and certainly the court will not read into a contract of insurance that which the contract itself does not contain, in order to construe the policy in favor of the insurer.
The case of Murray v. Metropolitan Life Ins. Co., 145 Miss. 266, 110 So. 660, decided by this Honorable Court, is on all fours with the case at bar and disposes of every question raised by the appellant and decides each and every question in favor of the appellee.
We respectfully submit that it is, therefore, the law in this state and in the majority of states that liability attaches at the time of disability and not at the time of the filing of due proof unless the policy specifically makes the filing of due proof within a given time a condition precedent, or makes a failure to file proof a forfeiture of the benefits under the policy. In the instant case there is no specified time in which due proof must be filed, nor is the filing of due proof made a condition precedent, neither is there any forfeiture clause in the policy.
Argued orally by P.D. Greaves, for appellant, and by F.C. Goodman, for appellee.
The appellee, F.G. Lamarque, brought this suit in the circuit court of Harrison county against the appellant, the Protective Life Insurance Company, to recover the sum of $2,500 upon a contract of insurance providing for total and permanent disability. On the trial there was a verdict for the appellee for the amount sued for, and appeal is prosecuted here.
In the court below the appellant filed, in addition to the general issue plea, a special plea to the effect that the plaintiff was not entitled to recover because he did not furnish any proof of his alleged permanent and total disability while he was an employee insured under the terms of the policy of insurance, and that he made and furnished no proof thereof while the policy of insurance was in force and effect. The plea also stated that the contract was an Alabama contract. The replication of appellee to this plea was to the effect that the appellant was a life insurance corporation organized and existing under the laws of Alabama with its home office in Birmingham; that it had been authorized to transact business in the state of Mississippi, and had named its agents for service of process; that the insured appellee was a resident of the state of Mississippi and an employee of the City Bus Company domiciled and doing business in Harrison county, Miss.; that, in accordance with the terms of the policy, he had furnished the requisite proof of total and permanent disability within a reasonable time after the disability occurred, and that the contract of insurance is governed by the laws of the state of Mississippi, and should be so construed in accordance with sections 5131 and 2294, Code 1930.
There is no conflict in the evidence as to the total and permanent disability of the appellee. The insurer, on July 10, 1925, executed and delivered to the Alabama Power Company, in Birmingham, Ala., a group policy of insurance effective August 2, 1925, for a term of one year renewable annually. This policy was issued to cover not only the eligible employees of the Alabama Power Company, but its associated and affiliated companies, including the Mississippi Power Company, and covered the lives of the employees thereof, and also contained a clause insuring the employees against permanent and total disability. The Mississippi Power Company delivered to Lamarque a certificate containing some of the provisions of the master or group policy of insurance, including the clause with reference to total and permanent disability. Lamarque, at that time, was an employee of the Mississippi Power Company and eligible to insurance under the terms of the contract. In April, 1926, the Mississippi Power Company sold its busses and streetcars in Biloxi to the City Bus Company, a corporation domiciled in Harrison county, Miss. The bus company took over the property and continued the employment of the bus drivers and mechanics. Thereafter, the City Bus Company notified the insurer that it desired to have included its employees in the master or group policy of insurance. This request was acceded to by the insurer, and all premiums were thereafter paid up to August 2, 1936. Lamarque became totally and permanently disabled in the month of December, 1935, and his employment was terminated by the employer on January 6, 1936, because of his disability. Lamarque's attorney notified the insurer of appellee's disability on February 24, 1936, and requested blank forms on which to furnish proof. Pursuant to this request, the insurer furnished the blanks which were executed by appellee, and proof was sent to the insurer on March 16, 1936. The insurer rejected the claim of Lamarque upon the ground that the proof was not furnished while Lamarque continued in the employ of the City Bus Company and while he was insured under the contract.
The proof shows that the Alabama Power Company applied for this group insurance in Birmingham, Ala., and that the policy of insurance was delivered to the Alabama Power Company at its office in Birmingham, and, as hereinbefore stated, that a certificate of the fact of such insurance was delivered to Lamarque by the Mississippi Power Company at its office in this state showing that he was covered by the same in the sum of $2,500 as for ten years' continuous employment under the terms of this group policy. There is no contention that Lamarque paid any premium, and the contract shows that the premiums on the master policy were to be paid by the Alabama Power Company, its associates and affiliates, including the Mississippi Power Company. The following excerpts from the master policy are set forth as being material:
The "Protective Life Ins. Co. Birmingham, Alabama . . . By this policy of insurance agrees to pay the amount determined by the formula on page 4 of this policy at the Home Office of the Company in Birmingham, Alabama. . . . This insurance shall be effective from Noon Standard Time at Birmingham, Alabama, August 2, 1925. . . .
"If any employee insured under this policy shall furnish the Company with due proof that he has, before having attained the age of 60, become wholly disabled by bodily injuries or disease, and will be permanently, continuously and wholly prevented thereby for life from engaging in any occupation or employment for wage or profit, the company will pay to him in full settlement of all obligations to him hereunder the amount of insurance then effective on his life, either in a single payment, or in annual installments as hereinafter set forth as the employer may elect. . . .
"Privileges and Conditions. The insurance hereunder shall during the continuance of the policy cover the employees included in and according to the formula hereinafter contained. . . .
"Termination of Insurance. The insurance of each employee covered hereunder shall end when he shall leave the service of the employer, or be dismissed therefrom, but without prejudice to his right to conversion to individual policy form."
The policy provides that any employee might, within 31 days, convert the group insurance into individual insurance upon payment of the premium due therefor, at the rate of his then attained age, in any one of the forms of policies issued by the insurer.
On this statement of facts, it is only necessary for us to consider the contention of the appellant that it was entitled to a peremptory instruction because Lamarque had not furnished proof of his total disability while he was an employee of the City Bus Company and while the insurance as to him was in force.
With the general observation that this policy was undoubtedly executed and delivered by the insurance company to the Alabama Power Company, and that it is unquestionably true that the contract stipulated that the insurer was to perform its obligation in Alabama, it is also unquestionably true that Lamarque did not furnish proof as to his total disability to the insurer until after the expiration of more than 60 days from the time he ceased to be an employee of the City Bus Company, and at a time, under the contract, when he was no longer insured.
There is no evidence aliunde the contract as to the intention of the parties thereto, so we are not confronted with the distinction made between lex loci contractus and lex loci solutionis. The contract in the case at bar is an Alabama contract, and the interpretation placed upon it by either party is to be determined by the laws of that state. Harrison v. Pike, 48 Miss. 46; Greenlee v. Hardin, 157 Miss. 229, 127 So. 777, 71 A.L.R. 741, and the authorities there reviewed. The language in this contract, "If any employee insured under this policy shall furnish the Company with due proof that he has, before having attained the age of 60, become wholly disabled by bodily injuries," has been construed by the Alabama court in the cases of McGifford v. Protective Life Ins. Co., 227 Ala. 588, 151 So. 349, 352, and McCutchen v. All States Life Ins. Co., 229 Ala. 616, 158 So. 729, 733, the former case holding that unambiguous contracts must be enforced as written, there being no room for construction, and that "Our conclusion is that furnishing proof of disability, and the approval of the same by the appellee, while the insured was a member, with premiums paid, and the insurance was in force were conditions precedent and not subsequent, as contended by appellant's counsel." In the McCutchen Case, supra, the court said, as to the McGifford Case, "Conditions precedent in the law of contracts, not impossible within themselves, are none the less binding, although by subsequent events performance may become impossible without fault of the promisor."
The Supreme Court of Mississippi, in the case of Murray v. Metropolitan Life Ins. Co., 145 Miss. 266, 110 So. 660, held that the liability of an insurer of employees, under a master policy providing for termination on the employee's discontinuance of active employment, becomes fixed at the time of injury to the employee, and may be enforced after termination of employment, there passing directly upon the question presented that the disability benefits were ended by reason of the fact that the claim therefor was not established before the termination of his employment. The Murray Case was not considered by the Alabama court, but it reached its own conclusion as to the insurer's liability in the interpretation of the contract, by which we are bound.
For a lucid discussion of the precise question here as to when and under what circumstances the interpretation placed upon the obligations of a contract by the court, of the place where it was executed and to be performed, and to what extent it is binding upon the court lex loci solutionis, see Beale's Conflict of Laws, vol. 2, p. 1199, section 346-1.
The appellee, however, insists that Lamarque was a resident of Mississippi, never having been in Alabama, and further that the City Bus Company operated its busses only in Harrison county, Miss., and that, therefore, our statute, section 5131, Code 1930, in conjunction with section 2294, Code 1930, requires us to solve the interpretation of such a contract as the one in the case at bar according to the laws of Mississippi. A pertinent part of section 5131 is as follows: "All contracts of insurance on property, lives or interests in this state shall be deemed to be made therein:" and of section 2294, in substance, is that the limitations prescribed in this chapter shall not be changed in any way whatsoever by contract between parties, and that any such change renders that limitation in the contract void.
Many of our decisions were cited in the case of Hartford Accident Indemnity Co. v. Delta Pine Land Company, 169 Miss. 196, 150 So. 205, wherein we enforced these statutes even against a foreign contract upon the ground that the insured was a citizen of the state, and held, in effect, that the provision for notice of loss, as therein set forth, was a limitation of action, and that, notwithstanding the Tennessee court had construed such a contract to be a limitation of liability, we declined to follow the Tennessee court. This case was appealed to the Supreme Court of the United States where it was reversed ( 292 U.S. 143, 54 S.Ct. 634, 78 L.Ed. 1178, 92 A.L.R. 928), and our construction of one of said statutes was held to be a violation of the due process clause of the Fourteenth Amendment to the Constitution of the United States. The situation confronting us in the case at bar cannot be differentiated from the Hartford Accident Indemnity Co. Case. We feel constrained to follow the decision of the Supreme Court of the United States, supra, notwithstanding our long line of decisions.
It follows from what we have said that the court below should have granted the peremptory instruction requested by appellant.
Reversed and judgment for appellant.