Cannon v. Katz Drug Co.
| Decision Date | 27 December 1978 |
| Docket Number | No. KCD,KCD |
| Citation | 577 S.W.2d 82 |
| Parties | Frances M. CANNON, Plaintiff-Appellant, v. KATZ DRUG COMPANY and Skaggs Drug Centers, Inc., Defendants-Respondents. 28824. |
| Court | Missouri Court of Appeals |
Robert K. Ball, II, Linda L. Parker, Kansas City, for plaintiff-appellant; Jackson & Sherman, Kansas City, of counsel.
Danny L. Curtis of Niewald, Risjord & Waldeck, P. C., Kansas City, for defendants-respondents.
Before WELBORN, Special Judge, Presiding, PRITCHARD, J., and HIGGINS, Special Judge.
Action for damages for breach of contract to provide group life insurance benefits. Verdict for plaintiff against defendants for $31,466.39. Appeal from judgment for defendants notwithstanding verdict and alternatively awarding them a new trial. The question with respect to the judgment n. o. v. is whether plaintiff's deceased husband and his beneficiary had vested rights and benefits under a group life insurance policy which could not be terminated without adequate timely notice. The questions with respect to the award of a new trial are whether the court erred in its verdict-directing instructions on plaintiff's case, and in receipt of evidence of conversations between plaintiff and her decedent and defendants' employees. Reversed with directions.
Plaintiff's petition alleged that Delphen K. Cannon was an employee of Katz Drug Company, and subsequently both Katz Drug Company and Skaggs Drug Centers, Inc.; that as their employee he held a certificate of group life insurance No. 13775-2692, Equitable Life Assurance Society of the United States, effective September 15, 1961, issued and delivered to him by Katz and secured through his employment with Katz, with a principal sum of $42,500, reduced to $31,875 at age 65, payable to Frances M. Cannon as beneficiary, which Katz promised would continue after his retirement on pension; that Delphen K. Cannon performed all conditions required of him; that Katz merged with or into Skaggs Drug Centers, Inc.; that prior to and after July 1, 1971, Frances M. Cannon and Delphen K. Cannon received assurances from agents and officials of Katz and Skaggs that the group life policy would remain in full force and effect as to Delphen K. Cannon and that his life insurance benefits under Certificate 13775-2692 would continue after his retirement; that in September, 1971, after Delphen K. Cannon ceased work as an employee, plaintiff and Delphen K. Cannon were informed that the policy (Equitable 13775) which contained the benefits promised Delphen K. Cannon had been cancelled effective July 1, 1971; that plaintiff and Delphen K. Cannon never received a notice of cancellation of said policy before September, 1971; that Delphen K. Cannon died February 10, 1973; that Katz and Skaggs through the authorized acts of its agents and officers, assumed the obligations and duties of the policy (13775) issued by Equitable; that plaintiff and Delphen K. Cannon justifiably relied on the assurances made by the officers and agents of Katz and Skaggs and in the certificate of life insurance, and D. K. Cannon's right to have said benefits continued after his retirement on pension became vested because he continued his employment based on the promise contained therein; that Frances M. Cannon as beneficiary has never received payment of the sum due, $31,875 (less premiums of $308.61, i. e., $31,466.39).
D. K. Cannon worked for Katz Drug Company from 1925 until his retirement October 6, 1971, at age 65. He died February 10, 1973. Plaintiff was a former employee of Katz where she met D. K. Cannon. They were married in 1933.
In early 1958, Katz management held a meeting where fifteen or sixteen Katz executives, including Mr. Cannon, were given a retirement agreement which included a pension plan of monthly sums to such employees upon retirement. Mr. Cannon's retirement was under such plan as amended.
In 1961, D. K. Cannon, through his employment, made application for and received Group Life Insurance Certificate 13775-2692, by which Equitable Life Assurance Society certified that:
Certificate 13775-2692 also provided:
Equitable policy 13775 provided:
Frances Marie Cannon, his wife, was designated beneficiary.
Equitable policy 13775 was known as a self-accounting and self-administering policy in that Equitable supplied Katz with materials and training and Katz did all clerical work, including issuance of certificates and deduction of premiums from payroll. Katz made deductions based on amount of insurance from Mr. Cannon's check to cover his insurance. Between 1961 and 1968, he received three or four job offers which he discussed with plaintiff. He rejected them because they could not duplicate the retirement benefits and insurance he was to receive upon retirement from his job with Katz.
In 1970, plaintiff and D. K. Cannon, as stockholders of Katz, received an announcement of an anticipated merger between Katz and Skaggs. They voted for the merger, as did sufficient stockholders to accomplish the merger in November, 1970, whereby Katz became a wholly owned subsidiary of Skaggs with its obligations assumed by Skaggs.
In April, 1971, plaintiff, in anticipation of her husband's retirement on October 6, 1971, called Latha Tanner, insurance clerk at Katz/Skaggs, for a record of the amount of insurance Mr. Cannon had, what it would be upon his retirement, and the premiums he would pay. Mrs. Tanner consulted with her supervisor, Mr. McGinnis or Mr. Ariagno, and responded to plaintiff's inquiry by written memorandum:
WRITE IT
To D.K. CANNON
Subject INSURANCE Date 4/6/71
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Present Am't Reduced 75% at Reduced at age 70 to
of Insurance Retirement or age 65 50% of Original Am't
Cost Cost Cost
Life Ins. $42,500) $27.80 $31,875 $19.13 $21,250 $12.75
)
AD&D 42,500) -0- -0-
Major Medical Cost to remain the same as at present
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Prior to July, 1971, Skaggs negotiated with Equitable for a group life insurance policy to replace 13775; and, effective July 1, 1971, 13775 was replaced by Group Life Insurance Policy No. 3160, a cost-free policy which terminated upon the retirement of employees, except those who retired prior to July 1, 1971. Four such employees, Donald Elder, Leo Plumberg, Albert Diamond, and Dean Widney, retired prior to July 1, 1971, and their life insurance benefits were continued after retirement under Group Life Insurance Policy No. 13775. Their retirement plan and insurance coverage was the same as Mr. Cannon's. Defendants admitted that all former employees who participated in group policy 13775 and who retired while it was in force but before June 30, 1971, who were still living, were covered by policy 13775.
Prior to June 28, 1971, Katz/Skaggs conducted a campaign, the purpose of which was to notify Katz employees of their benefits under the merger and the change in the life insurance policy. June 28, 1971, was designated SU (for sign up) Day, and packets of information were distributed through the stores and in the office. The materials advised that unless employees affirmatively elected to be excluded, they were automatically included under the new policy (3160) as of July 1, 1971. "Sign Up" was also advertised by store posters, recordings played in stores, and "teaser strips" in pay envelopes. Mr. Cannon did not elect to be excluded from 3160 and, on his retirement October 6, 1971, any coverage he had under 3160 terminated by its provisions.
Plaintiff never saw a "teaser strip," and denied receipt of any notice respecting her husband's insurance benefits. No certificate of the new policy was sent to Mr. Cannon. There was no conclusive evidence that Mr. Cannon received notice of any change in or cancellation of his insurance.
From time to time during her husband's employment, plaintiff called Vincent Davies in personnel records at Katz regarding errors in deductions from Mr. Cannon's pay checks. He would advise how corrections would be made, and such corrections...
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...Appeals held a direct contractual relationship exists between employee and group insurer. Similarly that court in Cannon v. Katz Drug Co., 577 S.W.2d 82, 87 (Mo.App.K.C.1978), said that an employee-participant in a contributory group life policy was not simply a third party donee beneficiar......
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Martin v. Prier Brass Mfg. Co., WD
...Brass, therefore, vested to the extent that the employment performance was completed and continued to be given. Cannon v. Katz Drug Co., 577 S.W.2d 82, 87 (Mo.App.1978); Nick v. Travelers Insurance Co.; Butler v. Equitable Life Assurance Society, 93 S.W.2d at 1023-1024. It was a right, cogn......
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