Lineberry v. Security Life & Trust Co. , 238 N.C. 264 ( 1953 )

77 S.E.2d 652 (1953) 238 N.C. 264

LINEBERRY
v.
SECURITY LIFE & TRUST CO.

No. 98.

Supreme Court of North Carolina.

September 30, 1953.

Henry C. Bourne, Tarboro, for plaintiff appellee.

Leggett & Fountain, Tarboro, and Womble, Carlyle, Martin & Sandridge, Winston-Salem, for defendant appellant.

BARNHILL, Justice.

Do the group policy, No. G-119, Certificate No. 2212, issued to Dr. Lineberry as provided in the group policy, and policy No. 128503 form a single contract made 31 July 1944 (the date of the group policy) so that the one-year incontestability clause contained in the group policy and the certificate nullifies the self-destruction clause in policy No. 128503 for the reason the suicide of the insured did not occur within one year next after the date of the group policy and the certificate issued pursuant thereto? This is the single question posed by this appeal. The court below answered in the affirmative. We are constrained to reverse.

The conclusion contained in the judgment entered in the court below is in effect a conclusion that when a contract is once entered into between two or more persons, there can be no subsequent modification or novation thereof and that any provision contained in an agreement between the parties relating to the same subject matter which is in conflict with the terms and provisions of the original contract must be treated as mere surplusage. It requires no citation of authority to sustain the statement that this is not sound law.

The cardinal principle pertaining to the construction and interpretation of insurance contracts is that the intention of the parties should control. If not ambiguous or uncertain, the express language the parties have used should be given effect, and the intention of the parties must be derived from the language employed. An insurance contract must be construed without disregarding words or clauses used or inserting words or clauses not used. If the intention of the parties is clear, the courts have no authority to change the contract in any particular or to disregard the express language the parties have used. If the sense and meaning of the terms employed are clear and unambiguous, they must be given their plain, ordinary and popular connotation unless they have acquired a technical meaning in the field of insurance. 29 A.J. 172; Roberts v. American Alliance Insurance Co., 212 N.C. 1, 192 S.E. 873, 113 A.L.R. 310; Stanback v. Winston Mutual Life Insurance Co., 220 N.C. 494, 17 S.E.2d 666; Ford v. New York Life Insurance Co., 222 N.C. 154, 22 S.E.2d 235; Hartford Accident & Indemnity Co. v. Hood, 226 N.C. 706, 40 S.E.2d 198; McDowell Motor Co. v. New York Underwriters Insurance Co., 233 N.C. 251, 63 S.E.2d 538; Johnson v. New Amsterdam Casualty Co., 234 N.C. 25, 65 S.E.2d 347, 29 A.L.R. 2d 507.

When the three instruments involved in this litigation are considered in the light of these rules of construction, it is made to appear that the contract of insurance sued upon is a separate, distinct, and independent contract, unmodified in any respect by the language contained in either the group policy or the certificate issued thereunder.

"Conversion" as used in the group policy means the act of converting or changing property of one nature to property of another nature, from one thing to another by substitution; exchanging for some specified equivalent. Webster's New Int. Dict. So then, the conversion provision in the original contract merely granted the insured the right, at his option, to convert his certificate into a separate and independent contract of insurance between him and the insurance company, without medical examination, and for the premium charged persons at his then attained age, provided he applied for the same within the stipulated thirty-one days next after his employment is terminated.

The "privilege of continuance" clause is "a favor offered to the insured, which he is at liberty to accept or not as he chooses. That this is its true meaning is made certain by the terms of the privilege which are distinctly stated. The party who has been insured may take out regular life insurance without medical examination. He need not furnish evidence of insurability. This is all the privilege undertakes to give." Duval v. Metropolitan Life Ins. Co., 82 N.H. 543, 136 A. 400, 406, 50 A.L.R. 1276, 1285; 29 A.J. 1029 et seq.

Under the express terms of the group policy and the certificate delivered to Dr. Lineberry, the protection afforded thereby ended (1) at the end of the month during which his employment was terminated, or (2) upon the prior issuance of an individual policy as provided in the certificate.

The group policy was between the employer and the insurance company for the benefit of the employees of the mill company. And when a contract is made for the benefit of another—in this case Dr. Lineberry—he can have no greater rights under that contract than are provided thereby. Thull v. Equitable Life Assurance Soc., 40 Ohio App. 486, 178 N.E. 850.

Therefore, the conversion provision in the original contract did not have the effect of continuing the insurance on the life of the employee. When the employment terminated, coverage provided by the policy and the certificate ceased. Baker v. Travelers' Insurance Co., 202 N.C. 432, 163 S.E. 110; Pearson v. Equitable Life Assurance Society, 212 N.C. 731, 194 S.E. 661; Colter v. Travelers' Ins. Co., 270 Mass. 424, 170 N.E. 407; Fearon v. Metropolitan Life Ins. Co., 138 Misc. 710, 246 N.Y.S. 701; Kowalski v. Aetna Life Ins. Co., 266 Mass. 255, 165 N.E. 476, 63 A.L.R. 1030; Beecey v. Travelers' Ins. Co., 267 Mass. 135, 166 N.E. 571; Duval v. Metropolitan Life Ins. Co., supra; Gans v. Aetna Life Ins. Co., 214 N.Y. 326, 108 N.E. 443, L. R.A.1915F, 703.

There are other provisions in the instruments which clearly mark the ordinary life policy issued to Dr. Lineberry, after his employment terminated, as a separate and independent contract.

The group policy was a contract between the mills company and defendant, terminable at the will of the mills company. The ordinary life policy was a contract between Dr. Lineberry and defendant in which the mills company had no interest.

The premium charged under the group policy was based on the age of the insured 1 August 1944 while the premium to be paid on the policy sued on was determined by the age of the insured on the date of its issuance in 1948.

The group policy contained a one-year incontestability clause, the ordinary life policy, a two-year clause. The one-year incontestability clause in the group policy was in full force and effect when the new policy was issued. The two-year period in the new policy had not expired.

There was no self-destruction clause in the group policy and the two-year period during which the risk of self-destruction was not assumed under the ordinary life policy had not expired. The group policy was effective upon the payment by the employer of the first premium as therein provided; the ordinary life policy, upon the payment by the insured of the first premium therein stipulated.

Furthermore, the new policy granted the insured nonforfeiture, face value surrender, paid up, and extended term insurance, not contained in the group policy or certificate.

For us to hold that the ordinary life policy was merely a continuation of the group policy insurance, and not a separate and independent contract, would require us to ignore completely the stipulation therein that "this policy and the application therefor * * * constitute the entire contract between the parties" and the provision in the group policy that "the issuance of such policy shall be a conversion of the Employee's insurance hereunder and shall as of the Effective Date and hour of the insurance under such individual policy, immediately and automotically terminate and cancel any insurance of the Employee then in force" and the other provisions fixing the date of termination of the group insurance and certificate of individual employees. It would likewise require us to strike therefrom the terms "from its date of issue" and "from the date of this policy" used to limit or qualify the incontestability and self-destruction clauses therein contained and substitute therefor the date of the group policy. This we are not privileged to do.

The language used by the parties is unambiguous. Its meaning is clear. There is no room for judicial construction. As the parties contracted, so are they bound.

The self-destruction of the insured having occurred within two years after the issuance of the policy sued on, the defendant, by the express terms of the contract, is not liable under the policy for any amount other than premiums actually paid. "It is there in plain English." Hundley v. Metropolitan Life Ins. Co., 205 N.C. 780, 172 S.E. 361, 362; Johnson v. Missouri State Life Insurance Co., 207 N.C. 512, 177 S.E. 646. This amount it has duly tendered. Judgment therefor, and no more, should be entered. To that end the judgment of the court below is

Reversed.