Clapp v. Sun Life Assurance Co. of Canada

• Decision Date: 06 July 1942
• Docket Number: 4-6817
• Citation: 163 S.W.2d 537,204 Ark. 672
• Parties: CLAPP v. SUN LIFE ASSURANCE COMPANY OF CANADA
• Court: Arkansas Supreme Court

163 S.W.2d 537

204 Ark. 672

CLAPP v. SUN LIFE ASSURANCE COMPANY OF CANADA

4-6817

Supreme Court of Arkansas

July 6, 1942

Appeal from Pulaski Circuit Court, Second Division; Lawrence C Auten, Judge; affirmed.

Affirmed.

Alonzo D. Camp, for appellant.

John M. Lofton, Jr., and Owens, Ehrman & McHaney, for appellee.

OPINION

HOLT J.

In August, 1939, Malvin John Clapp was an employee of the Missouri Pacific Railroad Company, and at this time the railroad company was carrying with appellee, Sun Life Assurance Company of Canada, a group insurance policy No. 1682-G covering its employees. Mr. Clapp applied for and was issued a certificate of insurance No. 18154 by appellee under this group policy on August 3, 1939. Harry Clapp, son of M. J. Clapp, was named beneficiary in the insurance certificate. At the time of acquiring the insurance, Mr. Clapp signed and delivered to the railroad company a deduction order, authorizing the railroad company to make monthly deductions from his pay check. This deduction was made on the last day of each month and was payable in advance on the first day of each month, the insurance being carried from month to month.

Mr Clapp died November 30, 1940. Demand was made by appellant beneficiary for the amount of insurance under the insurance certificate. Appellee denied liability on the policy and refused to pay same on the ground that the insurance certificate in question lapsed on September 30, 1939, for nonpayment of premiums.

January 3, 1941, appellant filed suit on the policy in the Pulaski circuit court, alleging full compliance with all of its terms. Appellee answered with a general denial. By agreement, the cause was submitted to the court sitting as a jury, and there was a finding in favor of appellee insurance company. From a judgment on this finding comes this appeal.

The group insurance policy No. 1682-G contains, among others, the following provisions: "Cessation of Assurance:--Subject to the terms of the clause providing limited waiver of premium on disability, the assurance shall cease at the earliest following dates:--(a) thirty-one days after the employee leaves the service of the employer or (b) at the due date of the premium to which the employee has failed to make a required contribution or (c) at the date such employee otherwise ceases to be eligible under the group policy. Assurance of all employees shall cease immediately upon the lapse or discontinuance of the group policy."

From the effective date of the policy, August 3, 1939, until Malvin John Clapp died, November 30, 1940, he earned each month between those dates sufficient money to pay his monthly premiums which were due and payable in advance on the first day of each month.

September 28, 1939, Mr. Clapp by virtue of a reduction order ceased work for the railroad company, but was reinstated October 16, 1939, and again worked for the company. Subsequent to September 28, 1939, Mr. Clapp paid none of the monthly insurance premiums required under the insurance certificate issued to him by appellee. It is not denied that during the months that he worked for the railroad company, subsequent to September 28, 1939, the railroad company paid him the full amount of his monthly earnings without first having deducted the monthly insurance premiums.

It is the contention of appellee that appellant, as beneficiary, is not entitled to recover for the reason that the insured suffered the policy to lapse on September 30, 1939, by refusing to pay the premium due in advance, October 1, 1939, and all subsequent premiums, and that the insured, Clapp, refused to reinstate the policy after he had been duly notified of his delinquency.

Appellant, on the other hand, contends that no notice was ever given to Mr. Clapp, the insured, that his monthly insurance premiums were not being paid and that the railroad company had in its hands his deduction order, and sufficient funds at all times with which to pay his monthly premiums, and says in his brief "the real issue in this case turns upon a question of notice."

It must be borne in mind, at the outset, that the group insurance contract in this case is one between the railroad company and appellee insurance company. Neely v. Sun Life Assurance Company of Canada, 203 Ark. 902, 159 S.W.2d 722, this court said: "The appellee and the railroad company were the only parties to the group policy, and the law seems to be well settled that the parties who make a contract may rescind the same by mutual agreement."

On the question of notice to the insured, Mr. A. S. Metcalf, chief clerk of the Missouri Pacific shops, testified: "Q. Do your records indicate when he (meaning Mr. Clapp) came back? A. Yes, sir, in the restoration of the force we had occasion to call Mr. Clapp back in line with seniority and he went back to work October 16, 1939. Q. Do your records reflect, or do you have any information as to why the premium reductions on Mr. Clapp's policy was discontinued? Do you have any record? A. I wouldn't have any records and couldn't say. Q. Was it called to your attention some time in 1939 or first part of 1940 that Mr Clapp was not carrying his insurance? A. In January, 1940--in order that you may understand this--all employees covered under the group plan get a low rate and it is set up so that such and such a per cent., I think, 74 per cent. of the shop...