Callison v. Continental Cas. Co.

• Decision Date: 21 October 1963
• Citation: 34 Cal.Rptr. 444,221 Cal.App.2d 363
• Parties: Walter M. CALLISON, individually and as Guardian ad Litem of Russel Callison, a minor, Plaintiffs and Appellants. v. CONTINENTAL CASUALTY COMPANY, a corp., Defendant and Respondent. Civ. 21012.
• Court: California Court of Appeals Court of Appeals

Page 444

34 Cal.Rptr. 444

221 Cal.App.2d 363

Walter M. CALLISON, individually and as Guardian ad Litem of Russel Callison, a minor, Plaintiffs and Appellants. v. CONTINENTAL CASUALTY COMPANY, a corp., Defendant and Respondent.

Civ. 21012.

District Court of Appeal, First District, Division 2, California.

Oct. 21, 1963.

Neil Cunningham, San Francisco, for appellants.

Carroll, Davis, Burdick & McDonough, San Francisco, for respondent.

AGEE, Justice.

Defendant insurance company issued a health and accident policy to plaintiff Walter M. Callison, effective February 5, 1958, which policy also covered his son, plaintiff Russell Callison, aged six years. It provided for payment of expenses incurred while 'necessarily confined in a hospital * * * as the result of injury or sickness.'

On March 21, 1960, the boy was severely burned in a fire and was hospitalized for over four months thereafter. The policy provided for a maximum aggregate liability of $5,000, less the deductible amount of $300, for 'any one accident or any one period of sickness.' The expenses incurred during the first hospitalization exceeded $5,000. Defendant paid this amount in full, less the $300 deductible.

Over six months after the termination of the first period of hospitalization, during which interval no expense covered by the policy was incurred, the boy re-entered the hospital and 'there underwent medical treatment and plastic surgery for the removal of scars, [and] adhesions, which developed as the result of said burns. * * *' ¹

Expenses of $1,955.69 were thereby incurred and plaintiffs filed this action to recover such amount less the $300 deductible. The total benefits payable under the policy for an injury having been paid in full, the only basis for obtaining any further recovery would have to be upon the theory that the boy's disability was caused by sickness and that the second hospitalization constituted a new period of sickness.

Following a nonjury trial, judgment was rendered in favor of defendant and plaintiffs have appealed therefrom.

If the disability is held to be a sickness, as distinguished from an injury, then the following provision in the policy becomes available to appellants: 'If, following a period for which expense is payable under this policy by reason of any one period of sickness, no expense covered by this policy is incurred as a result of such sickness for a period of six consecutive months but thereafter expenses are incurred from the same cause, such expense so incurred shall be deemed to be the result of a different sickness and compensable as a new period of sickness, subject to a new Deductible Amount.'

This provision has no application to an 'injury' or 'accident.' It binds the insurer to treat a second period of sickness as compensable if the required interval of six months occurs. Its obvious purpose is to eliminate any controversy between the parties as to whether such second period is the result of a new sickness or merely a recurrence of the previous sickness.

In interpreting the policy, we must be guided by the fundamental rule that any ambiguity or uncertainty therein will be construed in favor of the insured and against the insurer. (Continental Casualty Company v. Phoenix Construction Company (1956) 46 Cal.2d 423, 437, 296 P.2d 801, 57 A.L.R.2d 914; Arenson v. National Automobile and Casualty Insurance Company (1955) 45 Cal.2d 81, 83, 286 P.2d 816.)

However, '[w]hile uncertainties and ambiguities in insurance policies are to be resolved against the insurer [citation], this does not mean that courts are authorized to put a strained and unnatural construction on the terms of a policy in order to create an uncertainty or ambiguity.' (McMillan v. State Farm Ins. Co. (1962) 211 Cal.App.2d 58, 62-63, 27 Cal.Rptr. 125.)

It the policy ambiguous or uncertain? The policy starts with the general provision that respondent insures appellants for loss 'resulting from injury or sickness,' to the extent therein provided.

The other pertinent provisions are as follows: "Injury' wherever used in this policy means bodily injury caused by an accident. * * * 'Sickness' wherever used in this policy means sickness or disease contracted after this policy has been in force for not less than thirty days after its effective date * * *.' (Emphasis ours.) (A compensable 'injury' may occur at any time after the effective date.)

'Termination of this policy * * * shall not reduce or end any liability with respect to care or treatment of sickness contracted prior to the termination of this policy or injury occurring prior thereto. * * *

'Indemnity will be paid * * * only for expenses * * * incurred within two years after the date of the accident or within two years after the commencement of the first hospital confinement resulting from the sickness which is the basis of claim. * * * In no event will payment be made in excess of the applicable Aggregate Amount Payable * * * as the result of any one accident or any one period of sickness. * * *

[Then follows the so-called six months' provision, quoted above, which relates to what will be construed to be a 'new period of sickness.']

'When as the result of injury or sickness * * * the Company will pay, * * * [Then follows a list of compensable items and the amounts payable for each].'

It is significant that the terms, 'sickness,' 'illness' and 'disease' are used interchangeably with each of the others and with the intent to describe but one separate and distinct condition constituting a disability which is compensable under the policy. It is equally clear that the terms 'injury' and 'accident' are used interchangeably to describe another distinct kind or type of disability which is compensable under the policy.

This contradistinction between 'injury' and 'sickness' is maintained throughout the entire policy. When both of these terms are used in the same contract or document, the distinction is more evident. When both are not so used, some uncertainty may result under certain circumstances.

This is illustrated in Doody v. Davie (1926) 77 Cal.App. 310, 246 P. 339, which is relied upon strongly by appellants. There a city fireman was incapacitated from performing his duties for a period of nine days by reason of a sore foot, which condition was caused by stepping on a nail while at home on his "day off." His employer, the City of Oakland, refused to pay him for these nine days.

Section 100 of the city charter provided that, upon 'becoming incapacitated for duty by reason of sickness [a fireman] shall be entitled to sixty days' sick leave without loss of pay.' The fireman contended that his absence from work came under this 'sick leave' provision.

Section 100 1/2 of the city charter provided that, in case of injury sustained while in the performance of duty, a fireman shall receive, in addition to the sick leave provided for by section 100, medical treatment and full pay during the continuance of such disability.

Appellants, who were members of the city council, argued that section 100 1/2 intended to exclude by implication any intention to provide for payment of salary during a period of disability caused by injuries received outside of the course of employment.

The court rejected this argument, stating as follows: '[I]t seems to us more logical to conclude that since, in the case of injuries occurring during the course of the employment, a fireman, in addition to his 'sick leave' or payment of salary during disability, was allowed, by section 100 1/2 of the charter, medical, surgical, and hospital treatment, * * * this section [100 1/2] created a difference between injuries in the course of performance of duty and those sustained at another time, and that in the latter case, the fireman was merely entitled to the usual sick leave provided for in section 100 of the charter.' (P. 312 of 77 Cal.App., p. 340 of 246 P.)

Thus, because section 100 contained the only provision in the charter relating to disability benefits for an employee who became incapacitated while outside of the scope of his employment and because this provision used only the word 'sickness' to describe such incapacity, the court felt that it was the intention of the charter to include injury as well as sickness under the term 'sickness.'

The court recognized that this broad interpretation of sickness should be confined to the particular provisions of the charter under consideration. In the concluding sentence of its opinion, the court states: 'There are no authorities directly in point upon this question, but this court agrees with the trial court that the injury suffered by petitioner constitutes a 'sickness' within the meaning of section 100 of the Oakland city charter.' (Emphasis ours.)

The appellants in Doody v. Davie also called attention to 'the improvident and unusual result of paying men for services which they are unable to perform because of injuries suffered while about their own concerns on a day when they are relieved from duty.' The court answers this argument as follows: 'We can only suggest that, if this was not the intention of those responsible for the charter, it would be well to have it amended so as to remove the question from the realm of doubt.' (Emphasis ours.)

In other words, the court found a lack of clearness or certainty in the charter provisions relating to the question then before it and resolved such uncertainty in favor of the injured employee. This is in line with the policy of the workmen's compensation cases (cf. 'Workmen's Compensation,' 55 Cal.Jur.2d p. 16, § 4; 'Policy; Purpose; Theory').

Appellants also cite and rely upon Murray Hospital v. Angrove, 92 Mont. 101, 10 P.2d 577. Montana has a Workmen's Compensation Act which permits employers and their employees to enter into a contract with a hospital providing for hospital care (1) for injuries received in and arising out of the course of the employment and (2) for sickness, except veneral...