Little v. First Federated Life Ins. Co., 42

• Decision Date: 13 November 1972
• Docket Number: No. 42,42
• Citation: 267 Md. 1,296 A.2d 372
• Parties: Marsby C. LITTLE v. FIRST FEDERATED LIFE INSURANCE COMPANY.
• Court: Maryland Court of Appeals

Page 1

267 Md. 1

296 A.2d 372

Marsby C. LITTLE v. FIRST FEDERATED LIFE INSURANCE COMPANY.

No. 42.

Court of Appeals of Maryland.

Nov. 13, 1972.

John W. Hessian, III, Towson, for appellant.

John E. Sandbower, III, Baltimore (Michael A. Pretl and Smith, Somerville & Case, Baltimore, on the brief), for appellee.

Argued defore MURPHY, C. J., and McWILLIAMS, SINGLEY, SMITH, DIGGES and LEVINE, JJ.

DIGGES, Judge.

This case comes here on appeal from the Cirtuit Court for Baltimore County where Judge MacDaniel granted a motion for summary judgment in favor of First Federated Life Insurance Company, appellee. Marsby C. Little, appellant, requests us to reverse that judgment, establish that he is entitled to receive monetrary benefits under an insurance policy issued by First Federated and remand the case for a determination of the amount of those benefits.

Mr. and Mrs. Little, subject to a purchase money mortgage in favor of Townson Federal Savings and Loan Association, are joint owners of their home located at 27 Thornhill Road in Lutherville, Maryland. In the summer of 1968 Mr. Little, then sixty-four years old, was invited by Towson as one of its mortgagors to participate in a group policy of mortgage disability insurance under a master policy which had been issued to it by First Federated. The master policy became effective on April 1, 1968 and covered Towson's participating mortgagors to the extent of their outstanding mortgage indebtedness in the event of a physical disability. Mr. Little accepted the invitation and was issued a certificate of individual insurance. This granted him membership in the group plan effective on August 1 of [296 A.2d 374] that year. Although appellee renewed the master policy with their policyholder, Towson on April 1, 1969, soon thereafter, the insurance company stated that the program as written was actuarially unsound and an upward adjustment of the premium was indicated. Rather than face the prospect of a substantial increase in premium rates as authorized by the policy, the Association resolved to terminate the existing contract and accept in its place a new one having modified terms, conditions and eligibility requirements. Cosequently, the old policy was terminated and a new one became operative simultaneously at 12:01 a. m. on August 1, 1969. The eligibility requirements of the new policy excluded mortgagors who had passed their sixth-fifth birthday and, as Little had reached that age in January of 1969, he was not qualified for coverage. Accordingly, appellee advised Little that when the new policy came into effect at 12:01 a. m. on August 1, 1969 he would no longer be entitled to any benefits under the original policy. Appellant unsuccessfully protested this termination, first to Towson, then to its insurance adviser and finally to the State Insurance Commissioner.

On April 25, 1970 Little suffered a heart attack and was hospitalized under the diagnosis of myocardial infarction. When his claim for indemnification of his monthly mortgage payments was refused by First Federated, he instituted this declaratory judgment action to determine his rights under the insurance plan. Appellant's ingenious theory for recovery is based on an imaginative interpretation of his certificate of individual insurance. The third paragraph of page one of this certificate reads:

'This Certificate takes effect at 12:01 A.M. Standard Time at the address of the Policyholder on the Effective Date shown above and continues in force until 12:01 A.M. Standard Time on the date of termination as set out in the paragraph entitled 'Termination of Individual Insurance'.'

The provision entitled 'Termination of Individual Insurance' specifies that:

'The insurance of Insured Mortgagor, shall automatically terminate upon the date of the first of the following events to occur:

a. the date the indebtedness is discharged;

b. the date the indebtedness is transferred to another mortgagor;

c. the date of the mortgagor's 70th birthday;

d. the next premium due date following the Termination of the Policy;

e. the end of the period for which premium is paid if further premium payment is not made as agreed.'

Little seizes on subsection d of this list of termination events as the basis for his theory. He claims that under his individual insurance certificate he is required to pay a 'per annum' premium ¹ in the amount of $120.72 which becomes due on August 1 of each year, the anniversary of his certificate. And he contends that since the original master policy was not terminated until 12:01 a. m. August 1, 1969, the same day his premium was due, then, pursuant to subsection d, his coverage would continue until his 'next premium due date' following the date of termination. Appellant reasons that the 'next premium due date' following termination could not refer to the one on the same day as termination but must be his 'next' one due on August 1, 1970. As Little was stricken on April 25, 1970, under his theory, he is covered.

Ironically, the insurance company feels it would be shocking to allow recovery based on such a technicality and urges that the running of the clock for sixty seconds into August 1 should not extend appellant's coverage past this date. ² But, we agree with appellant that the benefits of the policy continued for him past 12:01 a. m. August 1, 1969 to the 'next premium due date following the Termination of the Policy.' In so doing, we note only that the insurance company fixed the date and moment of termination and it was its decision to extend the prior policy that one more minute. However, the issue then becomes to whose 'next premium due date' subsection d refers and whether that date arrived before or after Little's myocardial infarction. The determination of this issue requires an examination of the language used by the parties in their agreement. In conducting this review we recognize that a policy of insurance is like any other contract and is to be read and construed in the same way. Watson v. United States Fid. & Guar. Co., 231 Md. 266, 189 A.2d 625 (1963). While it is true that the cardinal rule of construction is to give effect to the intent of the parties, Schapiro v. Jefferson, 203 Md. 372, 100 A.2d 794 (1953), when the language of a contract is clear and unambiguous, the intention of the parties entering into the agreement should be gathered from the ordinary meaning of the words they have selected. Coopersmith v. Isherwood, 219 Md. 455, 150 A.2d 243 (1959); Weber v. Crown, etc., Corp., 214 Md. 115, 132 A.2d 857 (1957). 'Where a contract is plain as to its meaning, there is no room for construction and it must be presumed that the parties meant what they expressed' and expressed what they meant. Kermisch v. Savings, Bank, Md., 295 A.2d 776 (1972). Courts are not permitted to ignore provisions simply to avoid what may appear to be a hardship to one of the parties. Additionally, when a contract is composed of several documents, they should be construed together to garner the intent of the parties, New England Mutual Life Ins. Co. v. Hurst, 174 Md. 596, 199 A. 822 (1938), Aetna Ins. Co. v. Houston Oil & Transport Co., 49 F.2d 121 (5th Cir. 1931), cert. denied, 284 U.S. 628, 52 S.Ct. 12, 76 L.Ed. 535, particularly when, as here, one document makes specific reference to the...