Ames v. Baker

Decision Date09 June 1966
Docket NumberNo. 38014,No. W--6132--A--3--149,A,W--6132--A--3--149,38014
Citation68 Wn.2d 713,415 P.2d 74
CourtWashington Supreme Court
PartiesJohn G. AMES and Rose Ames, husband and wife, Respondents, v. Brian Richard BAKER, individually and as a Representative of Underwriter's at Lloyd's London, Subscribing Certificateppellant.

Gavin, Robinson, Kendrick, Redman & Mays, John Gavin, Yakima, for appellant.

Halverson, Applegate, McDonald & Weeks, Yakima, for respondents.

WEAVER, Judge.

'* * * the Insurer agrees to reimburse the Insured * * * for such reasonable out-of-pocket expenses incurred * * * arising out of an Attack of * * * Encephalitis * * * and which first manifests itself during the period of this insurance commencing at noon August 25, 1958 * * *.' (Italics ours).

The above provision of a 'dread disease' insurance policy forms the crux of this action brought by an insured against the designated representative of the Underwriters at Lloyd's, London. The issue posed is whether the clause 'which first manifests itself' refers to 'encephalitis' or to 'attack.'

Prior to August 25, 1952, John Ames purchased a health insurance policy from Lloyd's. According to the language of the policy, the insurer promised to pay certain expenses that members of the Ames' household should incur by reason 'of an attack of * * * encephalitis * * * which first manifests itself during the two-year period of this insurance.' The period of insurance began August 25, 1952 and extended to August 25, 1954. During the late fall or early winter of 1952, at a time when the policy was in force and effect, Mr. Ames' daughter (hereinafter referred to as the insured) developed a severe case of encephalitis (sleeping sickness). The insurer conceded liability and paid several thousand dollars of the insured's medical expenses.

By the spring of 1953, the insured appeared to have completely recovered from encephalitis.

In April, 1954, at a time when the policy was still in force, the insured suffered a second attack of encephalitis. Sometime prior to the expiration date of the policy (August 25, 1954), Ames purchased another health insurance policy from the insurer. This policy was similar to the first; it covered enumerated dread diseases which first manifest themselves during the period of insurance (August 25, 1954 to August 25, 1956), but was dissimilar in that it did Not provide coverage for attacks of encephalitis.

By the fall of 1956, the insured appeared to have completely recovered from the second attack although her strength was slow in returning and for the next couple of years she had to 'take it easy.'

Sometime prior to the August 25, 1956 expiration date of the second policy, Ames purchased from the insurer a renewal certificate which, in effect, renewed the second policy's coverage and extended it through August 25, 1958.

From fall 1956 until August, 1958, the insured gradually regained her strength. Prior to the expiration date of the renewal coverage, and at a time when the insured appeared to have completely recovered her health (although admittedly, not her full strength), Ames purchased from the insurer the health insurance policy sued upon in the instant action. This policy was, in all material aspects, identical to the first policy: it contained language promising that the insurer would pay expenses incurred by reason of 'an attack of * * * encephalitis, * * * which first manifests itself during the period of this insurance * * *' (August 25, 1958 through August 25, 1961).

Sometime during the month of May, 1960, at a time when the last-issued policy was still in force, the insured suffered her third attack of encephalitis.

The insurer refuses to recognize liability under the last-issued policy on the ground that the disease did not first manifest itself during the period between 1958 and 1961. It is the position of the insurer that the insured was first 'attacked' by encephalitis in 1952 at the time when the encephalitis germs first entered and infected her system.

The insured, on the other hand, contends that she was 'attacked' by encephalitis on three different occasions with the third attack first manifesting itself in 1960, during the period covered by the last-issued policy.

The trial judge rejected defendant's theory and held that coverage could be afforded if an Attack first manifested itself during the term of the policy and that the 1960 illness was such an attack. We agree with the trial judge.

It is well established that the language of an insurance policy should be interpreted in accordance with the way it would be understood by the average man...

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    ...is to be made in accordance with the way it would be understood by the ordinary person buying insurance. See also Ames v. Baker, 68 Wash.2d 713, 415 P.2d 74 (1966). Moreover, every purchaser of insurance can expect harm from such conduct. "Expected" means "more likely than not to occur." Me......
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    ...average person purchasing insurance. Morgan v. Prudential Ins. Co. of Am., 86 Wash.2d 432, 545 P.2d 1193 (1976) (citing Ames v. Baker, 68 Wash.2d 713, 415 P.2d 74 (1966) ). "Where possible, we harmonize clauses that seem to conflict in order to give effect to all of the contract’s provision......
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    ...the parties, Thomas v. Grange Ins. Ass'n, 5 Wash.App. 820, 822, 490 P.2d 1316 (1971), and cannot be read in a vacuum. Ames v. Baker, 68 Wash.2d 713, 415 P.2d 74 (1966). In construing an exclusionary clause in an insurance policy the purpose of the insurer in inserting the particular clause ......
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    ...and intent of the parties, a construction such as would be given the contract by the average man purchasing insurance. Ames v. Baker, 68 Wn.2d 713, 415 P.2d 74 (1966). The contract should be given a practical and reasonable rather than a literal interpretation; it should not be given a stra......
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