All States Life Ins. Co. v. Tillman, 1 Div. 737.

• Decision Date: 19 January 1933
• Docket Number: 1 Div. 737.
• Citation: 146 So. 393,226 Ala. 245
• Parties: ALL STATES LIFE INS. CO. v. TILLMAN.
• Court: Alabama Supreme Court

146 So. 393

226 Ala. 245

ALL STATES LIFE INS. CO. v. TILLMAN.

1 Div. 737.

Supreme Court of Alabama

January 19, 1933

Rehearing Denied March 9, 1933.

Appeal from Circuit Court, Mobile County; C. A. Grayson, Judge.

Action on a policy of life insurance by Leona Tillman against the All States Life Insurance Company. From a judgment for plaintiff, defendant appeals.

Affirmed.

Harry T. Smith & Caffey, of Mobile, for appellant.

Outlaw & Seale, of Mobile, for appellee.

BOULDIN Justice.

The action is upon a group policy of life insurance issued by appellant to the state of Alabama, insuring the lives of state employees.

J. R Tillman, an employee of the state, in full compliance with the plan of insurance, signed an authorization card for the required deduction from his salary as his monthly contribution to premium for group insurance; the individual certificate was issued to him as per contract; and, without question, he continued to be an insured employee until February, 1931, when he ceased to be an employee of the state. The insurer had notice of this fact, and thereupon marked his card canceled of March 1, 1931. He re-entered the employ of the state in August, 1931, and thereupon resumed payment of his monthly premiums by way of deductions from his salary from month to month, and so continued until his death in November, 1931.

But no report was made to the insurer that the insured had re-entered the employ of the state, no new card was filed, no new certificate issued to him, and, as we understand the testimony, the monthly premiums paid by the employer did not include the premiums for such coverage; the insurer had no knowledge of the re-employment, or of the renewed deductions from his salary, until after the death of the insured. So far as its records go, he ceased to be of the insured group from and after March 1, 1931.

Was the employee insured under the group policy at the date of his death?

It is quite well settled by our decisions that the payment by the employee of his monthly premium through a deduction from his monthly salary by his employer, who, by prearrangement, is to retain the same, and make payment of monthly premiums on the group policy, is payment to the insurer so far as such employee is concerned.

The entire plan of insurance enables the insurer to do business with one party in this regard, and provision is made in the policy before us by which the employer and the insured shall keep check of the employees who are insured from time to time, and of the payment of their premiums. The insurer issues no receipt to the insured employee for premium paid; he is provided with no means of knowledge as to the business operations between the employer and insurer; and, having fully performed by continuing in the employment, and paying his contribution to the premium in the manner devised in this scheme of insurance, he must be considered of the group covered by the policy. Pacific Mut. Life Ins. Co. v Watson, 223 Ala. 571, 137 So. 414; Atkinson v Travelers' Ins. Co. of Hartford, 202 Ala. 226, 80 So. 48; Continental Casualty Co. v. Vines, 201 Ala. 486, 78 So. 392.

But, admittedly, the initial employment in this case terminated. By express terms of the policy the insurance ends with the employment. Indeed, the coverage of the policy, in the nature of it, extends only to employees.

Appellant insists that the insurance on the life of this employee terminated March 1, 1931; that, upon re-employment by the state, his status was the same as a new employee; that in such cases a new application card must be filed, and a new individual certificate issued to him; and, hence, not being one of the insured after his re-employment, the collection of premiums by the state was wholly without authority, and not binding on the insurer, unless and until such facts became known to and approved by the insurer by acceptance of the premium or otherwise.

In the solution of this, the vital question in the case, a rather full synopsis of the contract is first set out.

The group policy issued to the state of Alabama June 1, 1929, was on the one-year renewable plan; renewable at the option of the state by continuing to pay premiums. That it continued in force until the death of the insured employee here involved is not in doubt.

The group policy stipulated, that, "in consideration of the application of the employer, an advance premium (naming the amount) and of such further premiums as are provided for herein," the insurer "agrees to pay, subject to the terms and conditions of this policy, the amount determined by the Plan of Insurance hereinafter contained, immediately upon receipt of due proof of the death of any employee of the State of Alabama." (Italics supplied.)

The "plan of insurance," as to the amount of insurance to each employee, and the monthly premium rate, need not be set out, as no question thereon is involved. Pertinent provisions of the "plan of insurance" are:

"The amount of insurance on any Employee insured hereunder, and the date on which said insurance shall become effective, shall be determined as follows: * * *

"Persons now insured as of June 1, 1929, are as shown on list hereto attached, marked Exhibit 'A,' and made a part hereof. Employees not now insured may become insured by signing authorization cards in the form shown by authorization card attached hereto, marked Exhibit 'B,' and made a part hereof, provided such cards are signed during the months of June and July, 1929. Present employees, not now insured may become insured after August 1, 1929, by signing proof of health satisfactory to the company. Persons employed by the state subsequent to June 1, 1929, may become insured by signing authorization cards, in the form hereinabove set forth, without proof of health during the thirty days following the first sixty days of employment, and thereafter by proof of health during the thirty days following the first sixty days of employment, and thereafter by proof of health satisfactory to the company.

"In no event shall any insurance on any particular employee be effective until or unless the monthly premium herein provided for shall have been paid to the company."

Then follow these stipulations:

" Employees Insured-Employees are automatically insured in accordance with the terms of the plan of insurance above, subject to the terms of this policy.

"The employer shall furnish the company with the names of all employees as they become eligible for insurance hereunder with the information as to each, necessary to determine the age, the amount of insurance, and the effective date of the insurance.

"Unintentional neglect on the part of the employer to furnish the name of any employee eligible for insurance hereunder shall not invalidate the insurance on the life of such employee.

" Termination of Insurance-The insurance on any Employee shall cease upon the termination of his employment except as hereinafter provided. If an Employee is disabled, given leave of absence, or temporarily laid off, the employment need not be...