Addison v. Aetna Life Ins. Co., 2958

• Decision Date: 30 January 1961
• Docket Number: No. 2958,2958
• Citation: 358 P.2d 948
• Parties: Bertha Maxine ADDISON, Appellant (Plaintiff below), v. AETNA LIFE INSURANCE COMPANY, a Corporation, Appellee (Defendant below).
• Court: Wyoming Supreme Court

Page 948

358 P.2d 948

Bertha Maxine ADDISON, Appellant (Plaintiff below), v. AETNA LIFE INSURANCE COMPANY, a Corporation, Appellee (Defendant below).

No. 2958.

Supreme Court of Wyoming.

Jan. 30, 1961.

R. H. Bennett, Sheridan, for appellant.

Edward T. Lazear of Loomis, Lazear & Wilson, Cheyenne, for appellee.

Before BLUME, C. J., and PARKER, HARNSBERGER and McINTYRE, JJ.

Mr. Justice McINTYRE delivered the opinion of the court.

Plaintiff seeks a declaratory judgment construing the provisions of a certain group insurance policy and declaring the rights and liabilities thereunder of the parties in this action. The complaint alleges that defendant issued a group life insurance policy insuring employees of Petty Geophysical Engineering Company, employer. Premiums were deducted from the wages of employees. On August 19, 1952, said defendant issued to Herbert M. Addison, an employee of such employer and husband of plaintiff, Certificate No. 1656 evidencing the fact that the life of said employee was insured under the group policy.

According to the complaint, Herbert M. Addison voluntarily terminated his employment with Petty Geophysical Engineering Company on October 28, 1956. The last payroll deduction for premiums on his insurance was made on that day. He was killed in Gillette, Wyoming, November 25, 1956. A claim for death benefit in the amount of $6,000 was made by plaintiff as beneficiary under the certificate of insurance.

The following provisions considered pertinent to this case are contained in Certificate No. 1656:

'Payment of Benefits

'The amount of insurance in force upon the life of the Employee will be payable to the beneficiary in accordance with the terms of the group policy in the event of death of the Employee from any cause, at any place, and at any time while insured.'

'Termination of Insurance

'The insurance of the Employee will automatically cease when the Employee fails to make the required contribution to the Employer, or upon termination of employment, or upon discontinuance of the group policy; whichever first occurs.'

'Conversion Privilege

'In case of termination of employment for any reason whatsoever, the Employee will be entitled to have a policy of life insurance issued to him by the Insurance Company without further evidence of insurability, provided:

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'(D) Written application for such a policy and payment of the first premium must be made by the Employee within 31 days after the period during which death would have resulted in a valid claim under the group policy.'

It is admitted in the case that written application for a policy of insurance under the conversion privilege provision was not made and that payment of the first premium was not made, but the 31 days allowed therefor had not yet expired at the time of death.

The defendant moved to dismiss plaintiff's action on the ground that the complaint failed to state a claim against defendant upon which relief can be granted. This motion was argued to District Judge G. A. Layman. He sustained the motion and entered judgment for the defendant, with a finding to the effect that no further facts could be alleged by which a cause of action might be stated. The judgment recited that plaintiff declined to plead further and elected to stand on her complaint.

The only question presented on appeal from this judgment is whether the insurance coverage on the employee ended at the actual termination of employment or at the expiration of the 31 days allowed for application for a policy of life insurance under the conversion privilege provision quoted above.

The view supported by cases from what would seem to be a majority of the jurisdictions considering the point is that a conversion provision contained in a group policy does not extend the period of coverage beyond the period of time the employee is covered under the 'termination of employment' clause, at least in the absence of a statute rendering effective a contrary rule. See Lineberger v. Security Life & Trust Co., 245 N.C. 166, 95 S.E.2d 501, 68 A.L.R.2d 1; Annotation 68 A.L.R.2d 116.

The general rule, as stated in 29A Am.Jur. (1960) Insurance § 1777, p. 850, is that under the provisions of group insurance policies and certificates issued thereunder giving employees the option to apply for converted policies within a specified time after the termination of their employment, the group insurance is not automatically extended during the specified period, and if the insured is injured or dies during such time without having exercised the right of conversion, no recovery can be had under such insurance.

Without reviewing all of the cases bearing on this point, it is sufficient for the purposes of a decision in this case to say, as was said in the case of Moriarty v. California Western States Life Ins. Co., Cal.App., 69 P.2d 434, 437, affirmed on rehearing 22 Cal.App.2d 260, 70 P.2d 684, that under the clear terms of the contract, insurance under it ceased when employment ceased. Policies of insurance, where the terms are clear and unambiguous, must be enforced like other contracts according to terms which have been used therein by the parties. Bradley v. Prudential Ins. Co., 9 Cir., 70 F.2d 988; Bergholm v. Peoria Life Ins. Co., 284 U.S. 489, 52 S.Ct. 230, 76 L.Ed. 416; New York Life Ins. Co. v. Gist, 9 Cir., 63 F.2d 732, certiorari denied 290 U.S. 651, 54 S.Ct. 68, 78 L.Ed. 564; Aschenbrenner v. United States Fidelity & Guaranty Co., 292 U.S. 80, 54 S.Ct. 590, 78 L.Ed. 1137.

In this particular case the language employed in the certificate of insurance is as...