Murray v. Metropolitan Life Ins. Co. , 145 Miss. 266 ( 1926 )

^* Corpus Juris-Cyc. References: Industrial Insurance, 31CJ, p. 967, n. 11 New, 29 New; p. 974, n. 3 New. This suit was instituted by the appellant against the Metropolitan Life Insurance Company on an insurance contract for alleged total and permanent disability. From the pleadings the following facts appear:

The J.J. Newman Lumber Company is engaged in the operation of a large sawmill located at Sumrall, Miss., and it employs several hundred men. On December 24, 1922, the Metropolitan Life Insurance Company issued and delivered to said lumber company a policy of group insurance covering the lives of the employees of said lumber company who were actually working for said company on that date. This group policy is called the "master" policy, and it contained a provision obligating the insurance company to deliver to the lumber company for delivery to each employee insured a certificate of insurance, this provision being as follows:

"Certificate of Insurance. — The company will issue to the employer for delivery to each employee insured hereunder an individual certificate showing the insurance protection to which such employee is entitled, the beneficiary to whom payable, together with a statement that in the case of the termination of the employment with the employer, for any cause whatsoever, such employee shall be entitled to have issued to him by the company, without further evidence of insurability, and upon application to the company within thirty-one days after such termination of employment and upon payment of the premium then applicable to the class of risk to which he belongs and to the form and amount of the policy at his attained age (nearest birthday) a policy of life insurance in any of the forms customarily issued by the company, except term insurance, in an amount equal to the amount of his protection under this policy at the time of termination. Upon termination of active employment, the insurance of any discontinued employee under this policy automatically and immediately terminates, and the company shall be released from any further liability of any kind on account of such person unless an individual policy is issued in accordance with the above provision. Re-employment will be classed as new employment in accordance with paragraph 4 hereof, and will be subject to the issuance of a new certificate."

In compliance with this provision, on the same date that the master policy was issued, there was delivered to each of the employees of the lumber company the required certificate of insurance. There was delivered to the appellant, William C. Murray, certificate serial No. 126, which recited:

"That under and subject to the terms and conditions of group policy No. 1666 — G William C. Murray, an employee of the J.J. Newman Lumber Company, herein called the employer, is hereby insured for one thousand two hundred fifty dollars."

Printed on this certificate was a letter from the said lumber company to its employees stating, among other things, that all premiums on the insurance were paid by the said lumber company. This policy also provided that the amount of insurance on the life of each employee should be determined by the length of service of such employee, in accordance with a schedule therein fixed, and that the amount of this insurance should be automatically increased from a minimum of five hundred dollars for those employed for six months, but less than one year, to a maximum of two thousand dollars for those employed for nine years, but less than ten years. The certificate issued to this appellee was for the sum of one thousand two hundred fifty dollars which indicates employment for three years, but less than four years, at the date of the issuance of the policy.

The names of the employees covered by the master policy were not set forth on the face thereof, but were contained in what was called a register kept in the home office of the insurance company, the provision of the policy in respect to this register being as follows:

"Register. — A register shall be kept by the company at its home office and shall show the names of the employees insured hereunder and the amount of insurance on each of such employees. Copy of said register at the date of this policy is supplied herewith and made part hereof, and copies of entries in said register subsequent to said date will be furnished by the company to the employer and will become a part thereof."

By the terms of the master policy, it was made the duty of the lumber company to report to the insurance company in writing as promptly as practicable after the 14th day of each month the names of all persons ceasing to be in its employ since the 14th day of the preceding calendar month and upon whom insurance under said master policy was to be discontinued, this provision being as follows:

"Insurance to be Discontinued. — The employer agrees to report to the company in writing, as promptly as practicable after the 14th day of each month, the names of all persons ceasing to be in its employment since the 14th day of the preceding calendar month and upon whom insurance hereunder is to be discontinued, together with the date when each person left said employment and the insurance hereunder was discontinued. The unearned premium returnable on account of discontinuance of insurance on any employee shall be one-half the average monthly premium payable for such employee for the particular month during which the employment of such employee was discontinued."

The master policy contained a provision for disability benefits which is in the following language:

"Total and Permanent Disability. — On receipt by the company at its home office of due proof that any employee insured hereunder has become wholly and permanently disabled by accidental injury or disease, before attaining the age of sixty years, so that he is and will be permanently, continuously and wholly prevented thereby from performing any work for compensation or profit, the company will waive the payment of each premium applicable to the insurance on the life of such disabled employee that may become payable thereafter under this policy during such disability, and, in addition to such waiver, will pay to such employee during such disability, in full settlement of all obligations hereunder pertaining to such employee, and in lieu of the payment of insurance as herein provided, such monthly or yearly installments as may be selected by such employee by written notice to the company at its home office on the following basis, to-wit (here follow optionable installment settlements allowable), in the first installment to be paid six months after receipt of due proof of total and permanent disability. If the employee dies during the period of total permanent disability, any installments remaining unpaid shall be payable as they become due to the beneficiary nominated by such employee, and such beneficiary shall have the right to commute such remaining payments into one sum on the basis of interest compounded at the rate of three and one-half per centum per annum. This provision is granted without additional cost to the employer."

The individual certificate of insurance which was issued to the appellee contained a similar provision for disability benefits, this provision of this certificate being as follows:

"Disability Benefits. — An employee insured under this plan who shall become wholly and permanently disabled while in our employ before reaching the age of sixty either by accidental injury or disease, and is thereby permanently, continuously and wholly prevented from pursuing any and all gainful occupation, will be regarded as a claimant by the Metropolitan Life Insurance Company. Six months after the receipt of due proof of such disablement, the insurance company will begin making payments of the amount of insurance under any one of the following plans at the option of the person insured," (here follow optionable installment settlements allowable).

"In the event of the death of the insured during the period of total permanent disability, any installments remaining unpaid shall be payable to the designated beneficiary."

From the pleadings it further appears that on the 7th day of November, 1923, while in the employ of the said lumber company, the appellant was accidentally injured; that in December, 1924, while still in the employ of the said lumber company, and as a result of the injury received on November 7, 1923, he became wholly and permanently disabled so that he was and will be permanently prevented from pursuing any and all gainful occupation; that the appellant was continued as an employee of the J.J. Newman Lumber Company until April 1, 1925, when the said lumber company reported to the appellee insurance company that insurance was to be discontinued on certain employees whose services had been discontinued, and among others whose employment was terminated as of April 1, 1923, was given the name of the appellant, covered by insurance certificate No. 126. The declaration alleged that due and timely notice of appellant's injuries was given to both the insurance company and the lumber company, requesting them to furnish blanks to make proper proof thereof; that like notice was given to the local agent of the said insurance company, but that the appellee company had failed and refused to furnish such blanks, and had failed and refused to pay the appellant anything pursuant to the terms of the policy.

To the declaration the appellee filed a plea of the general issue, and also special pleas numbered 1, 2, 4, 5, and 8, setting up the several provisions of the policy above quoted and averring in varying language that in accordance with these several provisions the termination of appellant's active employment, with the said lumber company on April 1, 1925, automatically terminated his insurance under the policy and released the appellee from all liability to the appellant; and that since the appellant did not apply to the company within thirty-one days after the termination of his employment for an individual certificate showing the insurance protection to which he, as such employee, was entitled, or for any policy of insurance to which he would be entitled under the provisions of the policy contract, and did not offer to pay the premium for an individual policy, or apply for a policy of life insurance in any of the forms customarily used by the company, any insurance had or possessed by the appellant was discontinued automatically on the termination of his employment, and all his rights thereunder were canceled and the appellee released from all further liability of any kind on account of the appellant. To these several pleas demurrers were filed and overruled.

The appellee filed a special plea, numbered 3, setting up the failure of appellant to furnish, before the termination of his employment on April 1, 1925, due proofs to the effect that he was totally and permanently disabled, and that upon the termination of said insurance on April 1, 1925, appellant thereupon ceased to have any rights whatsoever under said policy. The appellee also filed a special plea, numbered 6, averring the failure of the appellant to furnish the proofs of disability required by the policy, and that consequently the suit was prematurely brought for the reason that no installments were due under the policy until the lapse of six months after proof of disability is filed with the company. To these two pleas the appellant filed replications, and demurrers were filed to these replications. The demurrer to the replication to the third plea was sustained, while that to the replication to the sixth plea was overruled.

The appellee also filed a special plea, numbered 7, averring the termination of appellant's insurance on April 1, 1925, the failure to assert any claim under said policy or to file proofs of disability prior to April 1, 1925, and that appellant was not, as a matter of fact, totally and permanently disabled within the terms of the policy contract on or before April 1, 1925, and that by reason of the termination of said insurance on April 1, 1925, the appellant thereafter ceased to have any rights whatsoever under said policy. To this plea two replications were filed, and demurrers to each of them were sustained. Both parties thereupon declining to plead further, final judgment was entered in favor of the defendant insurance company.

The contention of the appellee, which was sustained by the rulings of the court below upon the pleadings, is that under the terms and provisions of the policy contract, upon the termination of the active employment of the insured, the insurance "automatically and immediately terminated," and the insurer was released from any further liability "of any kind on account of such person," unless an individual policy was issued to the insured within thirty-one days after the termination of such employment, and the premium applicable to the class of risk and the form and amount of such policy was thereafter paid by the insured, and that since no claim for total and permanent disability was made by appellant before the termination of his employment, he then had no further rights under the policy.

The appellant contends that the termination of his employment and the resulting termination of the insurance only relieved the insurer from liability for injuries and resulting disability occurring after the discontinuance of the insurance, and that it did not discharge any liability to the appellant that had become fixed during his employment and the continuance of the insurance; that 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 appellant's injury and resulting total and permanent disability occurred while he was employed by the lumber company and while the policy was in full force and effect, the liability of the insurer had become fixed and may be enforced in accordance with the terms and provisions of the policy.

We think the contention of the appellant is correct. It is true that the provisions of the master policy and those of the individual certificate of insurance should be construed together, but there is no conflict between them in respect to the rights of the insured to disability benefits. The provision of the master policy that, "upon termination of active employment, the insurance of any discontinued employee under this policy automatically and immediately terminates, and the company shall be relieved from any further liability of any kind on account of such person unless an individual policy is issued in accordance with" other provisions of the policy in respect thereto, releases the insurance company from liability for death or disability of the former employee occurring after the termination of active employment and the discontinuance of the insurance, but does not affect the liability of the insurer for total and permanent disability occurring while the insured is actively employed and the policy contract is in full force and effect. The contentions of appellee as they appear from the pleadings and from the brief of counsel seem to be that further liability for disability benefits would be released by the discontinuance of active employment, although a claim therefor had been made and recognized before the termination of such employment, but if we are in error in this, and the contention is simply that the rights of appellant to the disability benefits were ended by reason of the fact that the claim therefor was not made and established by due proof before the termination of his employment, we still do not think the contention is maintainable. To so hold would largely destroy this beneficent provision which is intended to provide for those unfortunate employees or former employees who by reason of injuries resulting in total and permanent disability to engage in any gainful occupation, are rendered unable to render further service to the employer or to provide for themselves. Total and permanent disability which will entitle the employee to benefits under the provisions of this policy will at the same time render him unable to be of further service to the employer, and will usually result in his employment being at once discontinued. That an employee who was totally and permanently unable to render service to his employer must be continued in the service and on the pay roll of the employer to enable him to secure the disability benefits provided in the policy, or to enable such employee to make proper proof of his disability, could hardly have been within the contemplation of the parties to the contract, and this provision should not be given this construction, so manifestly in favor of the insurer, unless the language or the policy clearly requires.

The provisions of both the master policy and the certificate of insurance giving the insured the right, within thirty-one days after the termination of his employment, to demand a policy of insurance on his life, although such a policy might make provision for disability, would be of no benefit to the insured in respect to past injuries and resulting disability, because such a policy would only cover disabilities occurring after the issuance of the policy. That the liability of the insurer for any disability occurring before the termination of employment is not affected by the failure to demand and secure the issuance of a life policy is made more manifest by the fact that, under the original policy contract, further payment of premiums after total and permanent disability was waived, while under this life policy, which was to be issued upon demand after the termination of employment, and which was to be in some one of the forms of life insurance contracts customarily written by said insurer, the premiums were required to be paid by the insured, and any right to disability benefits would be measured by the provisions of that contract, whatever they might be.

Counsel for the appellee contend that their position is supported by the case of Wheeler v. Monsanto Chemical Works (Mo. App.), 263 S.W. 881, in which it was held that under the facts of that case neither the employer nor the insurance company is liable after the employee ceases to be in the employment of the company taking out the group insurance. We fail to see any analogy between that case and the case at bar. In the Wheelercase, supra, the action was for the death of the insured, and it was expressly stated that the death of the insured occurred after the termination of his employment and the discontinuance of his insurance, the court saying that:

"It may be further noted that the deceased, Ezill Lewis, was not in the employ of the defendant at the time of his death, and that the instrument sued on provides that the life of said deceased was insured during the time that he remained in the employ of the defendant, and that said insurance should cease upon the termination of said employment."

In the case at bar the total and permanent disability of the insured occurred while he was still employed by the company.

In overruling the demurrer to the replication to appellee's sixth special plea, which said replication pleaded a waiver of proofs of disability, we think the court below was correct. The error which we have herein pointed out runs throughout the court's rulings on the remaining pleadings, and upon a retrial, it may be corrected in accordance with the views herein expressed without here discussing each of these special pleas and demurrersseriatim.

The judgment of the court below will therefore be reversed and the cause remanded.

Reversed and remanded.