Antram v. Stuyvesant Life Ins. Co.

Decision Date06 December 1973
Citation291 Ala. 716,287 So.2d 837
PartiesAlbert L. ANTRAM, etc. v. STUYVESANT LIFE INSURANCE COMPANY, a corp. SC 276.
CourtAlabama Supreme Court

Vickers, Riis, Murray & Curran, Mobile, for appellant.

McDermott & Slepian, Mobile, for appellee.

JONES, Justice.

This is an action by Albert L. Antram, appellant, seeking declaratory judgment to determine his rights under a salary continuation provision in a sickness and accident policy issued by appellee, Stuyvesant Life Insurance Company, to Antram's employer, Beloit Corporation, for the benefit of Beloit's employees. Antram was covered under said policy.

On January 4, 1968, Antram was riding in an automobile in Beaumont, Texas, and, while acting within the line and scope of his employment, an automobile driven by Margaret R. Cooley collided with Antram's automobile. As a direct result of said collision, Antram was totally and permanently disabled.

The benefits payable under the policy are:

'Fifty (50%) percent of regular earnings . . . subject to a maximum monthly indemnity of $1,000.00, Less any amount of disability income benefits paid or payable under primary Social Security, Workmen's Compensation, Unemployment Compensation or disability benefits law . . ..' (Emphasis ours.)

Antram's benefits were computed as follows:

                50% of $900 Per Month Base Salary          $450.00
                  Less Monthly Social Security
                    Benefits                       155.85
                  Less Monthly Workmen's Comp
                    Payments                       190.67   346.52
                                                   ------  -------
                Net Monthly Salary Continuation
                  Payment                                  $103.48

On November 6, 1968, Antram filed suit in the U.S. District Court for the Eastern District of Texas, Beaumont Division, against Ms. Cooley. On July 16, 1969, the Probate Court of Mobile County, Alabama, declared Antram to be a person of unsound mind, and Letters of Guardianship were issued to his wife, Dorothy Louise Antram.

On August 27, 1969, the Probate Court of Mobile authorized Mrs. Antram, as Antram's guardian, to settle the Texas suit with Ms. Cooley for $100,000.

Prior to and until said settlement, Antram was paid $196.67 per month by Beloit's workmen's compensation carrier who would otherwise have been obligated to continue said payments until they reached a total of $176,600. The total amount of workmen's compensation payments received prior to the settlement was $2,682.68.

Pursuant to Title 26, § 312, Code of Alabama 1940 (Recomp.1958), the workmen's compensation payments were discontinued on September 4, 1969, and Antram was required to refund the $2,682.68 received from the carrier prior to the settlement.

After settlement, the discontinuance of the workmen's compensation to Antram, and the reimbursement of the $2,682.68 to the carrier, appellee continued to deduct the $190.67 per month from the salary continuation payments although Antram demanded that the appellee cease making such deductions.

However, on January 1, 1970, when social security benefits were increased by 15%, the appellee reduced the monthly payments to the appellant to $80.08. On January 1, 1971, social security benefits were increased by 10% And the appellee reduced the salary continuation payment to $62.08. The Social Security Act was amended again in September of 1972, increasing the benefits by 20%, and the appellee accordingly reduced its payments to the appellant to $22.70.

Appellant requested the court to declare that the appellee was not entitled to deduct $190.67 per month from his salary continuation payment and to direct the appellee to reimburse to Antram the sums representing said workmen's compensation benefits previously deducted from the salary continuation payments.

The appellant contends that no workmen's compensation benefits were or are Paid or Payable to him as the result of the third-party recovery which excused the carrier from liability.

The appellee contends that Antram's accident was incurred in the line and scope of his employment and that workmen's compensation benefits were and are Paid and Payable to Antram within the meaning of those terms as they were used in the policy.

The court entered a decree on August 17, 1972, holding that the exclusionary clause contained in the disability policy was applicable to Antram and therefore Antram was not entitled to the relief prayed for. Hence the appeal.

The issue is whether the words 'or payable' should be interpreted as authorizing the insurer to deduct the workmen's compensation benefits from the salary continuation payment where the insured did not receive such benefits due to a settlement with the third-party tort feasor. Otherwise stated, when the insured does not receive any workmen's compensation benefits due to a settlement with a third-party tort feasor, should the insurer be allowed to reduce the payments it is obligated to make to the insured under a salary continuation insurance policy by the amount the insured would have received under the Workmen's Compensation Act if there had been no third-party recovery merely because the insured's injury fortuitously occurred while the insured was acting in the line and scope of his employment? We answer in the negative and hold that the trial court erred in allowing the offset of $190.67 per month (the amount of workmen's compensation benefits which would have been payable except for the third-party recovery) against the salary continuation provision of the policy.

The appellant contends that the policy is ambiguous and that interpreting 'or payable' to authorize the insurer to deduct payments that he, the appellant, was never entitled to receive, due to a third-party settlement, is unreasonable, illogical, and has the effect of allowing the insurer to participate in the third-party settlement. The appellant relies heavily on Baggett v. Webb, 46 Ala.App. 666, 248 So.2d 275 (1971), Cert. den. 287 Ala. 725, 248 So.2d 248 (1971), although he acknowledged that this case is not directly in point. The only case cited by appellant which bears directly on the issue before us is Burkett v. Continental Casualty Company, 271 Cal.App.2d 360, 76 Cal.Rptr. 476 (1969). 1

The appellee argues that the workmen's compensation benefits are still payable subject to a credit resulting from the third-party recovery. Appellee contends that Land v. Continental Casualty Company, 284 Minn. 453, 170 N.W.2d 568 (1969) is directly in point and requests that this Court adopt the reasoning of Land. The appellee also cites Wise v. American Casualty Company, 117 Ga.App. 575, 161 S.E.2d 393 (1968) in support of its arguments. The only Alabama case relied on is Phillips v. The Prudential Insurance Company of America, 285 Ala. 472, 233 So.2d 480 (1970), which held that the exclusionary clause in a family hospital policy stating that the policy did not provide benefits for an injury coversed by any Workmen's Compensation Act, related to the type of injury placing the claimant under the workmen's compensation law, rather than to the benefits flowing from such law. The appellee also argues that the Court should not remake its contract with Beloit.

The Alabama cases cited are neither by direct application nor by analogy dispositive of this precise issue now before us. The California Burkett case stands foursquare for the position of the appellant (injured employee) as does the Minnesota Land case for the appellee (insurer). Faced with a first impression case in Alabama--and with split authority from other jurisdictions--we must return to our basic rules of interpretation and construction of insurance contracts to resolve this issue. As summarized by the Alabama Court of Appeals in the 1961 case of Mercantile Life Insurance Company v. Johnson, 41 Ala.App. 307, 132 So.2d 248,

'It is a well settled rule that the terms of an insurance policy will be construed most strongly against the insurer and where the words of a policy are ambiguous, or where they are capable of two reasonable interpretations, that favorable to the insured will be adopted.'

Likewise the expansion of this rule was stated by the same court during the same term in Globe Life Insurance Company of Alabama v. Howard, 41 Ala.App. 621, 147 So.2d 853, thusly:

'Also, it is said that the terms of a policy are construed in their plain, ordinary and popular usage . . . and are to be given a rational and pratical construction.'

We believe the 'plain and ordinary' portion of the above rule is here applicable. Within the context which we are asked to construe this contract, we see nothing ambiguous about the word 'payable'. The mere fact that adverse parties contend for different constructions does not of itself force the conclusion that the disputed language is ambiguous. Under the stipulated facts of this case, workmen's compensation benefits are payable or they are not payable. Title 26, § 312, Code of Alabama 1940 (Recomp.1958), as amended, provides the irrefutable answer. Where the injured employee received a third-party recovery in excess of workmen's compensation benefits, there is no liability on the part of the employer, or its compensation carrier, to pay workmen's compensation benefits. Indeed, except for its share of the employee's attorneys fees, as provided in the last sentence of § 312, the third-party recovery in such cases operates as a complete bar to pay remedy for workmen's compensation payments. 2

The contention that the injured employee could have elected to forego the third-party recovery and thereby entitled himself to workmen's compensation benefits--and, therefore, such benefits are 'payable'--is untenable. The inquiry is not what he could have done--hence producing a hypothetical situation--but rather the inquiry is what in reality did he do? In this case he pursued and made recovery, as he had a right to do, in his third-party action. Once his...

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