Thompson v. Occidental Life Ins. Co. of Cal. , 90 N.M. 620 ( 1977 )

OPINION

HERNANDEZ, Judge.

Plaintiff sued the defendant, Occidental Life Insurance Company of California, Inc. (Occidental) to recover a part of an insurance premium paid on a policy of life insurance owned by her on the life of her deceased husband. Plaintiffs claim against the defendant, Robert K. Foster (Foster) was that he (the agent who sold the policy) negligently failed to advise her that it was Occidental’s position that the policy did not provide for a refund of any part of the premium should the insured die prior to the end of the premium period.

Defendants’ motions for summary judgment were granted and plaintiff appeals both judgments, alleging two points of error.

The pertinent facts are these: Occidental issued the subject life insurance policy on February 11, 1960, in the face amount of $130,000.00. The insured was the husband of the plaintiff and she was the owner. The paragraph relating to premiums provided:

“Premiums are payable in advance from the policy date during the life of the Insured. If a part of the premium ceases to be payable under the provisions of an attached rider, the premium shall then be reduced accordingly. The mode of premium payment may be changed on any policy anniversary to any other mode for which a premium is shown in the policy data. All premiums are payable at the Home Office of the Company or to an authorized agent or cashier of the Company, but only in exchange for an official receipt signed by the President or Secretary and counter signed by the person receiving the payment. If any premium remains unpaid after the grace period, this policy shall terminate subject to the non-forfeiture provisions.”

The mode of payment of the premiums of the policy was changed three times after its issuance, in 1964 and 1970 and on February 11, 1974. On the latter date the mode of payment was changed from monthly to annual payments and the premium of $6,014.70 was paid. Plaintiff’s husband died on May 9, 1974.

Plaintiff contends that the trial court erred in granting Occidental’s motion for summary judgment because there is an ambiguity in the paragraph of the policy relative to premiums and that consequently there was an issue of fact as to its interpretation. We do not agree. An insurance policy is a contract and is generally governed by the law of contracts, and the rights and duties of the parties are to be determined by its terms. Vargas v. Pacific National Life Assurance Company, 79 N.M. 152, 441 P.2d 50 (1968). Should there exist an ambiguity in any of its terms a liberal construction favorable to the insured is to be adopted. Vargas, supra. However, the determination as to whether an ambiguity exists is one of law to be made by the court. Vargas. Plaintiff argues that the paragraph relating to premiums “does not state that the unearned premium will be refunded nor does the provision state that the unearned premium will not be refunded.” We find no ambiguity in the provisions of this paragraph. What the plaintiff would have us do, under the guise of construction, is to read into it terms it does not contain. It is not within the province of the courts to write a new contract for the parties. Absent any ambiguity, our duty is confined to interpreting the contract which they made for themselves. Davies v. Boyd, 73 N.M. 85, 385 P.2d 950 (1963).

As to the question of whether the plaintiff was entitled to a refund of a part of the premium paid, the rule is that:

“In the absence of statutory or contract provision to the contrary, if a legal risk has once attached or commenced, there can be no apportionment or return afterward of the premium, so far as that particular risk is concerned. And diminution in its duration has no effect to decrease the amount stipulated as the premium or price for renewing the risk, for it is sufficient to preclude a return that the insurer has been liable for any period, however short.” 6 Couch Cyclopedia of Insurance Law § 34:9 (2d ed., R. Anderson, 1961). See Sil-Turn Co. v. London Guaranty & Acc. Co., 153 Misc. 805, 276 N.Y.S. 412 (1934).

There being no statutory or contract provision for a refund in this instance, the plaintiff was not entitled to one. The trial court did not err in granting Occidental’s motion for summary judgment.

Plaintiff contends that the trial court erred in granting the defendant Foster’s motion for summary judgment because he had negligently misrepresented to plaintiff Occidental’s position that they would not refund any part of the premium after her husband’s death. Plaintiff argues that Foster had a duty to advise her “that if she paid the premium on an annual basis that Occidental would not refund any portion of the premium after her husband’s death.” Plaintiff in answer to an interrogatory concerning Foster’s negligent failure to advise her about the question of refunds stated: “Specifically in February 1972, I consulted with Mr. Foster relative to changing from monthly to annual payments, asking him the amount of discount, if any, for such change.” She went on to say that Mr. Foster was well aware of the precarious state of her husband’s health and that he was 70 years of age. She concluded by saying, “Mr. Foster must have realized this was an inadvisable change and should have so advised me.” In an affidavit filed in support of his motion for summary judgment, after setting forth the times that the mode of payment of premiums was changed by plaintiff, Foster stated “[n]one of said changes were made at the suggestion nor insistence of the affiant.”

“In the absence of special circumstances, an agent of the insurer is clearly not the agent of the insured.” Volker v. Connecticut Fire Ins. Co., 22 N.J.Super. 314, 91 A.2d 883, 889 (1952). Section 58-5-28, N.M.S.A.1953 (Repl. Vol. 8, pt. 2) provides in part:

“Any person licensed as an agent to represent an insurance company shall, in any controversy between the insured or his beneficiary and the company, be held to be the agent of the company issuing the insurance solicited or applied for, anything in the application or the policy to the contrary notwithstanding . . . .”

Our Supreme Court has held:

“[A]n applicant for insurance who accepts a policy, the provisions of which are plain, clear and free from all ambiguity, is chargeable with knowledge of its terms and legal effect. It is the duty of the assured to read and know the contents of the policy before he accepts it, and where he fails or neglects to do so, he is es-topped from denying knowledge of its terms and conditions, unless he alleges and proves that he was induced not to read the same by some trick or fraud of the other party.” Porter v. Butte Farmers Mutual Insurance Company, 68 N.M. 175, 360 P.2d 372, 375 (1961).

Plaintiff cites us to several cases, none of which is applicable in that they involved instances of misrepresentation. Plaintiff cites no authority in support of her contention that Foster negligently failed to advise her that it was Occidental’s position that the policy did not provide for a refund of any part of the premium. Foster was not plaintiff’s agent. There are circumstances where an insurance agent will be considered the agent of the insured but this is not one of them. See Inland Empire Ins. Co. v. Bair, 246 F.2d 505 (10th Cir.1957). We know of no authority which holds that in circumstances such as this an insurance agent owes a duty to advise the insured. Quite the contrary, there is authority that: “Interpreting contracts of insurance is not within the scope of authority of a soliciting agent . . . .” Union Life Ins. Co. v. Burk, 169 F.2d 235 (10th Cir.1948). The record reveals that the plaintiff is possessed of considerable business experience and clearly the estoppel provided for in Porter, supra, does apply in this instance. The trial court correctly granted Foster’s motion for summary judgment.

IT IS SO ORDERED.

LOPEZ, J., concurs. SUTIN, J. (concurring in part, dissenting in part).