Summary
holding that the unambiguous terms of a claims-made policy barred the insured's claim
Summary of this case from Accident Ins. Co. v. Donald Bowles, Inc.Opinion
23950.
ARGUED MARCH 13, 1967.
DECIDED MARCH 23, 1967.
Certiorari to the Court of Appeals of Georgia — 114 Ga. App. 807 ( 152 S.E.2d 773).
Anderson, Walker Reichert, Albert P. Reichert, Jr., for appellant.
Bloch, Hall, Groover Hawkins, F. Kennedy Hall, for appellee.
Where an application for life insurance recites "There shall be no liability for the payment of any benefit unless the application shall have been approved by the Medical Director of the Society," and a receipt for payment of the alleged first premium issued simultaneously recites that, "In consideration of the payment made by the applicant and of the statements in the application, the Society agrees that the benefits applied for shall be in effect from the date of the completion of the application if the applicant is insurable for the amount and plan applied for as a standard risk —," (emphasis supplied) a petition, based upon the above receipt, alleging that the insured died from violent means not involving any question of his health five days after the receipt was issued, attaching copies of the application and receipt, but not alleging that the application had been completed by being approved by the Medical Director, was properly dismissed on demurrer. The Court of Appeals erred in reversing the judgment of dismissal.
ARGUED MARCH 13, 1967 — DECIDED MARCH 23, 1967.
This case is fully reported in Etheridge v. Woodmen of the World Life Ins. Soc., 114 Ga. App. 807 ( 152 S.E.2d 773), and no further statement of the facts is necessary other than to state the ruling of the Court of Appeals considered by this court in the grant of the writ of certiorari. That court held that the application for insurance and the receipt for payment constituted a contract providing temporary life insurance in accordance with the terms of the policy unless the applicant was not an insurable risk on the date of the application, and the conditional coverage was effective until the society acted on the application or until the contract became ineffective by expiration of the time set out therein. The application contained an agreement by the applicant that there would be no liability until approval of his application was made by the medical director of the society and until one cash payment had been made to the society while he was in good health. The receipt states that in consideration of the payment the society agrees that the benefits applied for shall be in effect from the date of the completion of the application if the applicant is a standard risk under the rules and practices of the society. The court granted certiorari to study the question of whether or not the words of the receipt amounted to a binder of insurance, as held by the Court of Appeals, pending the determination of the society as to whether or not it accepted the application or until the contract became ineffective by the expiration of time as stated in the receipt.
The petition failed to allege whether the applicant had ever been accepted by the society or whether the medical director had approved the application, and attached copies only of a blank application showing the agreements of the parties and the language of the receipt for payment, together with averments that the sums required had been paid.
We would think that after countless decisions of this court, such as Murphy v. Lawrence, 2 Ga. 257; Florida State Hospital v. Durham Iron Co., 194 Ga. 350, 355 ( 21 S.E.2d 216); Ewing v. Paulk, 208 Ga. 722 ( 69 S.E.2d 268), White County v. Wooten, 219 Ga. 236 ( 132 S.E.2d 653); and Ford Motor Co. v. Williams, 219 Ga. 505 ( 134 S.E.2d 32) have established the law that facts essential to a cause of action must be alleged as well as proven, there would now be no serious doubt on that matter. The fundamental reason for this law is to prevent "shooting a defendant in the dark." Thus we completely accept the contention of the respondent predicated upon Simpson v. Brown, 162 Ga. 529 (1) ( 134 S.E. 161, 47 ALR 865), as cited in Skinner v. Bearden, 77 Ga. App. 325, 327 ( 48 S.E.2d 574), that: "One of the most important rules in the construction of deeds is to so construe them that no part or words shall be rejected. The courts lean to such construction as reconciles the different parts, and reject the construction which leads to a contradiction." But its application here leads us to the very opposite conclusion from that contended for by the respondent. Two documents, the application and the receipt, must be construed to conform to the rule. The application contains the unambiguous provision that, "There shall be no liability for the payment of any benefit unless the application shall have been approved by the Medical Director of the Society." This application is signed by the insured, and his beneficiary is bound thereby. The receipt provides that, "In consideration of the payment made by the applicant and of the statements in the application, the Society agrees that the benefits applied for shall be in effect from the date of the completion of the application, if the applicant is insurable for the amount and plan applied for as a standard risk under the rules and practices of selection of the Society. If the applicant is not insurable as a standard risk on the date the application is completed, this agreement shall be void from its inception and the Society shall have no liability but agrees to return to the applicant or pay to the beneficiary the amount paid by the applicant with this application." These two documents must be construed, and the above rule of construction must be applied to each of them. By that rule we must not reject "parts or words." This means we must not reject the part of the application which says: "There shall be no liability for the payment of any benefit unless this application shall have been approved by the Medical Director of the Society." Nor can we under the rule reject the part of the receipt which provides that, "The Society agrees that the benefits applied for shall be in effect from the date of the completion of the application, if the applicant is insurable..." (Emphasis supplied). No reasonable reading of the application can fail to see that it is incomplete until approved by the medical director. Nor can any reasonable reading of the receipt overlook that it is conditional upon this completion of the application, and the applicant is found to be insurable as a standard risk. It is explicit in saying that if applicant is not insurable as a standard risk on the date the application is completed the agreement is void and the society will refund what has been paid. Therefore, to say that a petition based upon these, which does not allege that the application has been completed and the applicant found at that time to be insurable as a standard risk, sets out a cause of action, is to ignore parts of the documents and give effect to other parts plainly dependent upon the ignored parts for validity. We believe the established law to be that when a petition is sustained against a general demurrer, proof of its allegations entitles the petitioner to recover. See Hicks v. Revels, 142 Ga. 524 ( 83 S.E. 115); Pierpont Mfg. Co. v. Mayor c. of Savannah, 153 Ga. 455 ( 112 S.E. 462); Oliver v. Central of Ga. R. Co., 210 Ga. 597 ( 81 S.E.2d 793); Middlebrooks v. Goolsby, 213 Ga. 617 ( 100 S.E.2d 441). But despite the assertions in the opinion of the Court of Appeals that the conditions upon which the receipt is based, which are indispensable to recovery may be shown by evidence, it nevertheless remains, and that court would surely hold that when allegations of a cause of action which have been upheld as against a demurrer are proven no further evidence is required to authorize a verdict for the plaintiff. Therefore, all talk about further evidence is futile and irrelevant.
The Court of Appeals ruled that "the condition stated in the receipt is construed to be a condition subsequent rather than a condition precedent." 114 Ga. App. 807, supra. This ruling we think cannot be reconciled with the stipulation in the application that "There shall be no liability for the payment of any benefit unless the application shall have been approved by the Medical Director of the Society..." Such ruling contradicts the receipt which in part says: "In consideration of ... the statements in the application, the Society agrees that the benefits applied for shall be in effect from the date of the completion of the application, if the applicant is insurable for the amount and plan applied for as a standard risk..." These quotations from the application and receipt show that it depended upon the stated conditions whether any insurance was provided by the receipt. To put the full insurance in force at the time when the medical director knew nothing of the physical condition, would ignore the reason for being concerned about health. It is beyond all human reason to think seriously that the insurer, who takes great care to determine if the insured is in good health, would thus lapse into utter indifference as to the insured's health.
We are fully aware of the rule of construction that requires ambiguities in an insurance policy to be construed in favor of the insured and against the insurer who wrote the policy. This position is fully covered in Davis v. United c. Life Ins. Co., 215 Ga. 521 (2) ( 111 S.E.2d 488). But an equally valid rule is that an unambiguous policy requires no construction, and its plain terms must be given full effect even though they are beneficial to the insurer and detrimental to the insured. Yancey v. Aetna Life Ins. Co., 108 Ga. 349 ( 33 S.E. 979); Wheeler v. Fidelity Cas. Co., 129 Ga. 237 ( 58 S.E. 709); Wolverine Ins. Co. v. Jack Jordan, Inc., 213 Ga. 299 ( 99 S.E.2d 95), and citations at page 302. These two documents upon which this case depends are the application and the receipt which are harmonious since the receipt expressly makes the application a part of the receipt. The receipt as above mentioned says in part: "In consideration ... of the statements in the application the Society agrees ..." One of the statements in the application is: "I agree as follows: ... 2. That there shall be no liability for the payment of any benefit unless this application shall have been approved by the Medical Director of the Society." The receipt further provides that: "the benefits applied for shall be in effect from the date of the completion of the application" and "if the applicant is insurable for the amount and plan applied for as a standard risk under the rules and practices of selection of the Society." When one looks to the application it must be recognized that its completion embraces its approval by the medical director of the society, and this is a condition precedent to any "liability for the payment of any benefits," so stated in the application and expressly adopted in the receipt. It is wrong to say the receipt insures from its date when it says that the benefits "shall be in effect from the date of the completion of the application, if the applicant is insurable for the amount and plan applied for as a standard risk." The only provision for ascertaining if the applicant is insurable is for the medical director of the society upon consideration of the application to so find.
There can be found no conflict in the application and the receipt. The receipt would be meaningless without the application. The amount and plan of insurance is found only in the application. It takes both to give meaning to the receipt, and since the receipt expressly states that part of its consideration is statements in the application they are in full accord. Can a court of justice therefore eliminate and ignore statements in the application that there is no liability unless the application shall have been approved by the medical director? The receipt by reference adopts this statement in the application. It is a statement by the applicant made in the application, for it is preceded by these words: "I agree as follows."
The two papers amount only to insurance between acceptance of the risk and issuance of the policy, when and if the application is completed by the approval of the medical director and the applicant is found to be insurable for the amount and plan applied for as a standard risk. The effective date of the insurance is when these conditions have been met, thus covering a period not embraced in the policy if dated sometime after full acceptance of the risk. This might not be of great value but the parties agreed upon it, and hence it is no legitimate concern of the courts.
For the foregoing reasons the trial court did not err in sustaining the demurrer and dismissing the petition, and the Court of Appeals erred in reversing that judgment.
Judgment reversed. All the Justices concur, except Mobley and Nichols, JJ., who are disqualified.