Albrecht v. North Am. Life Assur. Co.

• Decision Date: 28 April 1975
• Docket Number: No. 73--343,73--343
• Citation: 27 Ill.App.3d 839,327 N.E.2d 317
• Parties: Janet ALBRECHT, Administratrix of the Estate of Peter William Albrecht, Deceased, Plaintiff-Appellee, v. NORTH AMERICAN LIFE ASSURANCE COMPANY, Defendant-Appellant.
• Court: United States Appellate Court of Illinois

Page 317

327 N.E.2d 317

27 Ill.App.3d 839

Janet ALBRECHT, Administratrix of the Estate of Peter William Albrecht, Deceased, Plaintiff-Appellee, v. NORTH AMERICAN LIFE ASSURANCE COMPANY, Defendant-Appellant.

No. 73--343.

Appellate Court of Illinois, Second District, First Division.

April 28, 1975.

Brady, McQueen, Martin & Callahan, James L. Martin, Elgin, for defendant-appellant.

Geister, Schnell, Richards & Brown, Elgin, for plaintiff-appellee.

HALLETT, Justice:

The plaintiff Administratrix sued the insurance company on the theory that, under the terms of a group life insurance policy issued by it to her deceased husband's employer, the Marison Company, he was an insured. At the close of all of the evidence, the court entered judgment for the plaintiff. Defendant has appealed, contending the deceased never became an insured under the group insurance contract because no application for insurance was ever signed by him. We agree and, therefore, reverse the judgment.

The facts are rather simple. Defendant issued a group life insurance policy to the Marison Company on February 2, 1960. The parties agree that this policy was in effect at all times material to this action. The contract provided, in part:

'* * * An Employee shall become eligible for insurance hereunder . . . on the day following the date he completes three months of continuous active service with the Employer.

An Employee shall become insured hereunder . . . on the date of completion of a written application for insurance or on the date on which he first becomes eligible, whichever is later, * * *'

The deceased was employed by the Marison Company on August 25, 1971, and first became eligible for coverage under the policy on November 25, 1971. Deceased terminated his employment with the Marison Company four days later. He died approximately three weeks later apparently as the result of injuries that he sustained in an automobile accident.

The parties agree that, by virtue of another provision of the life insurance contract, the deceased would have been insured under the contract at the time of death provided that deceased had become insured before terminating his employment with Marison Company. The parties further agree that deceased never completed a written application for insurance before or during the four days that he was eligible for insurance under the above quoted terms of the contract. In fact, it appears from the record that deceased was never given an application to fill out. The question below and the question here on appeal is whether or not the deceased was insured under the contract in view of his failure to complete the application. Resolution of this question depends on whether the requirement to fill out an application was ambiguous, whether it was a condition precedent, and finally, whether the failure to give an application to deceased was chargeable to the defendant on the theory that Marison Company acted (in this case failed to act) as defendant's agent.

Defendant has argued, and we think rightly, that the provisions of the contract set out above were clear and unambiguous. The provision relating to when an employee becomes insured states that he does so when he becomes eligible 'or' when he completes an application for insurance, 'whichever is later'. Plaintiff has maintained that this created an ambiguity in that the word 'or' suggests that an employee becomes insured when he does one or the other of two things. Plaintiff is correct; up to a point. The language 'whichever is later' is that point. Indeed, the only possible meaning is that both things must be done since one thing cannot logically occur later than another unless that other thing has occurred. Thus, the employee becomes insured only after he becomes eligible and completes an application, 'whichever is later'. Thus, the contract provision is not ambiguous since '(a)n ambiguous contract is one capable of being understood in more senses than one; an agreement obscure in meaning, through indefiniteness of expression, or having a double meaning. Whiting Stoker Co. v. Chicago Stoker Corp., 171 F.2d 248 (7th Cir.); 17A C.J.S. Contracts § 294'. (First National Bank v. Victor Comptometer Corp. (1970), 123 Ill.App.2d 335, 341, 260 N.E.2d 99, 102). In the present case, the wording could admittedly and probably should have been made more clear; yet, the wording used was clearly susceptible to only one logical interpretation. The wording used was similar to the lamentable situation which occurs occasionally in our language; the double negative. The wording, however tricky, is susceptible to only one interpretation. It is therefore not ambiguous.

The next question is whether the requirement of filling out an application constituted a condition precedent to obtaining life insurance. A condition precedent is one which must be performed before a contract becomes effective or which is to be performed by one party to an existing contract before the other party is obligated to perform (American Insurance Co. v. Rosenberg (1961), 28 Ill.App.2d 357, 171 N.E.2d 662). Defendant has argued, and again we think rightly, that the requirement was a condition precedent. This is because the application constituted the only means of obtaining from the employee an affirmative sign that he wished to be covered under the group plan. This is so even where the employer pays the premium as is the case here. The possibility exists, albeit remote, that an employee might not want to participate in the plan if only for tax reasons. So long as there is a possibility that an employee might not want coverage under a group plan and can elect not to have it, as is the case here,...